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SCHOOL DISTRICTOF

AUDUBON

Audubon Board of EducationAudubon, New Jersey

Comprehensive Annual Financial ReportFor the Fiscal Year Ended June 30, 2014

of the

Comprehensive Annual

Financial Report

Audubon Board of EducationAudubon, New Jersey

For the Fiscal Year Ended June 30,2014

Prepared byAudubon Board of Education

Finance Department

AUDUBON SCHOOL DISTRICT

INTRODUCTORY SECTION

Letter of TransmittalOrganizational ChartRoster of OfficialsConsultants and Advisors

FINANCIAL SECTION

Independent Auditor's Report

K-I Report on Compliance and on Internal Control Over Financial Reporting Basedon an Audit of Financial Statements Performed in Accordance withGovernment Auditing Standards

Required Supplementary Information - Part IManagement's Discussion and Analysis

Basic Financial Statements

A. District-wide Financial Statements:

A-IA-2

Statement of Net PositionStatement of Activities

B. Fund Financial Statements:

Governmental Funds:B-1B-2B-3

Balance SheetStatement of Revenues, Expenditures, and Changes in Fund BalancesReconciliation of the Statement of Revenues, Expenditures, and Changes in

Fund Balances of Governmental Funds to the Statement of Activities

Proprietary Funds:B-4 Statement of Net PositionB-5B-6

Statement of Revenues, Expenses, and Changes in Fund Net PositionStatement of Cash Flows

Fiduciary Funds:B-7 Statement of Fiduciary Net PositionB-8 Statement of Changes in Fiduciary Net Position

Notes to the Financial Statements

Page2789

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13

16

2526

2829

30

313233

3435

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Required Supplementary Information - Part II

C. Budgetary Comparison Schedules

C-I Budgetary Comparison Schedule - General FundC-Ia Combining Schedule of Revenues, Expenditures and Changes

in Fund Balance - Budget and Actual (if applicable)C-2 Budgetary Comparison Schedule - Special Revenue Fund

Notes to the Required Supplementary InformationC-3 Budget-to-GAAP Reconciliation

Other Supplementary Information

D. School Level Schedules:

E. Special Revenue Fund:

E-l Combining Schedule of Revenues and ExpendituresSpecial Revenue Fund - Budgetary Basis

F. Capital Projects Fund:F-1 Summary Statement of Revenues, Expenditures, and Changes in Fund Balance -

Budgetary BasisF-2 Summary Statement of Project Expenditures

G. Proprietary Fund:

Enterprise Fund:G-l Combining Statement of Net PositionG-2 Combining Statement of Revenues, Expenses and Changes in

Fund Net PositionCombining Statement of Cash FlowsG-3

H. Fiduciary Funds:H-l Combining Statement of Fiduciary Net PositionH-2H-3H-4

Combining Statement of Changes in Fiduciary Net PositionStudent Activity Agency Fund Schedule of Receipts and DisbursementsPayroll Agency Fund Schedule of Receipts and Disbursements

57

N/A64

65

N/A

68

70N/A

74

7576

78798081

Long-Term Debt:

I-I Schedule of Serial Bonds 83

1-2 Schedule of Obligations under Capital Leases 84

1-3 Budgetary Comparison Schedule - Debt Service Fund 85

STATISTICAL SECTION (Unaudited)

J-l Net Position by Component 87J-2 Changes in Net Position, Last Ten Fiscal Years 88J-3 Fund Balances, Governmental Funds, Last Ten Fiscal Years 90J-4 Changes in Fund Balances, Governmental Funds, Last Ten Fiscal Years 91J-5 General Fund - Other Local Revenue by Source, Last Ten Fiscal Years 92J-6 Assessed Value and Actual Value of Taxable Property, Last Ten Fiscal Years 93J-7 Direct and Overlapping Property Tax Rates, Last Ten Fiscal Years 94J-8 Principal Property Tax Payers, Current Year and Nine Years Ago 95J-9 Property Tax Levies and Collections, Last Ten Fiscal Years 96J-10 Ratios of Outstanding Debt by Type, Last Ten Fiscal Years 97J-ll Ratios of Net General Bonded Debt Outstanding, Last Ten Fiscal Years 98J-12 Ratios of Overlapping Governmental Activities Debt, As of December 31, 2013 99J-13 Legal Debt Margin Information, Last Ten Fiscal Years 100J-14 Demographic and Economic Statistics 101J-15 Principal Employers, Current Year & Nine Years Ago (information not available) N/AJ-16 Full-time Equivalent District Employees by FunctionlProgram, Last Ten Fiscal Years 102J-17 Operating Statistics, Last Ten Fiscal Years 103J-18 School Building Information, Last Ten Fiscal Years 104J-19 Schedule of Required Maintenance, Last Ten Fiscal Years 105J-20 Insurance Schedule 106

SINGLE AUDIT SECTION

K-3

K-2 Report on Compliance with Requirements Applicable to Each MajorProgram and on Internal Control Over Compliance in Accordance withOMB Circular A-133 and New Jersey OMB Circular Letter 04-04

Schedule of Expenditures of Federal Awards, Schedule ASchedule of Expenditures of State Financial Assistance, Schedule BNotes to the Schedules of Awards and Financial AssistanceSchedule of Findings and Questioned Costs

K-7 Summary Schedule of Prior Audit Findings

108111112113115120

K-4K-5K-6

I Introductory Section

AUDUBON PUBLIC SCHOOLS350 EDGEWOOD AVENUE

AUDUBON, NEW JERSEY 08106

Steven C. CrispinSuperintendent of Schools856-547-7695

November 5,2014

Honorable President and Members ofThe Audubon Board of EducationCounty of CamdenBorough of Audubon350 Edgewood AvenueAudubon, NJ 08106

Dear Board Members:

The comprehensive annual financial report of the Audubon School District for the fiscalyear ended June 30,2014, is hereby submitted. Responsibility for both the accuracy of thedata and completeness and fairness of the presentation, including all disclosures, restswith the management of the Board of Education. To the best of our knowledge and belief,the data presented in this report is accurate in a" material respects and is reported in amanner designed to present fairly the financial position and results of operations of thevarious funds and account groups of the District. All disclosures necessary to enable thereader to gain an understanding of the District's financial activities have been included.

The comprehensive annual financial report is presented in four sections: introductory,financial, statistical and single audit. The introductory section includes this transmittalletter, the District's organizational chart and a list of principal officials. The financial sectionincludes the general purpose financial statements and schedules, as we" as the auditor'sreport thereon. The statistical section includes selected financial and demographicinformation, generally presented on a multi-year basis. The District is required to undergoan annual single audit in conformity with the provisions of the Single Audit Act of 1984 andthe U.S. Office of Management and Budget Circular A-133, "Audits of State, LocalGovernments and Not for Profit Organizations" and the state Treasury Circular Letter 98-07OMB, "Single Audit Policy for Recipients of Federal Grants, State Grants and State AidPayments". Information related to this single audit, including. the auditor's report on theinternal control structure and compliance with applicable laws and regulations and findingsand recommendation, are included in the single audit section of this report.

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1. REPORTING ENTITY AND ITS SERVICES:

The Audubon School district is an independent reporting entity within the criteria adoptedby the GASB as established by NCGA Statement NO.3. All funds and account groups ofthe district are included in this report. The Audubon Board of Education and all its schoolsconstitute the Districts reporting entity.

The school district consists of three schools - Mansion Avenue Elementary, HavilandAvenue Elementary and Audubon Junior-Senior High School. The district provides a fullrange of educational services appropriate to grade levels K-12. These include regular,vocational and special education programs. The Audubon school district also offers a pre-school program for handicap students. In 2011 the Audubon School District was approvedto participate in the State's Inter-District Public School Choice Program. This programallowed students from other districts in the surrounding area to attend Audubon HighSchool. Student admlssion was based on availability of space, and the district receivedstate aid for each student enrolled. Currently the district enrolls one hundred and twostudents in this program

On June 30,2009 the Audubon Park Board of education was dissolved, as the State ofNew Jersey took steps to eliminate all non-operating districts in the State. The AudubonPark students are now considered resident students of the district. The district stillmaintains a send-receiving with the Mount Ephraim school district for grades nine throughtwelve.

The district completed the 2013-2014 school year, with an average daily enrollment of1,410 students. During the past few years enrollment has increased with our district'sparticipation in the State'

Pupil Enrollments

SCHOOL YEAR AVERAGE DAILY ENROLLMENT

2004-2005 1,761

2005-2006 1,629

2006-2007 1,567

2007-2008 1,524

2008-2009 1,498

2009-20010 1,482

20010-2011 1,440

2011-2012 1,402

2012-2013 1,409

2013-2014 1,410

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2. ECONOMIC CONDITION AND OUTLOOK:

Audubon, a community of about 9,000 people, lies in the eastern portion of CamdenCounty. This community of 1.2 square miles is comprised primarily of residential units andsmall retail businesses. It is a stable community with little room for additional development.The town, however, is currently experiencing a rebirth. Several new small businesses haveopened and development of a major shopping center is now completed.

3. A SNAPSHOT OF OUR SCHOOLS

ELEMENTARY SCHOOLS

Both the Haviland Avenue School (K-2) and the Mansion Avenue School (3-6) havetaken great strides in their efforts to infuse technology into the learning process. LCDProjectors and Smartboards have been installed in classrooms. Additionally, a numberof i Pads have been purchased. These purchases were a significant part of thedistrict's Strategic Plan, initiated during the 2007-2008 school year. In addition, goalsrelated to writing, transitioning students, increasing scores on standardized tests, andcollege preparedness continue to drive professional development, budgeting andcurriculum development.

HIGH SCHOOL

Like the elementary schools the junior - senior high school continues to move forwardin an effort to infuse technology into all instructional areas. The need to immerse ourstudents in a technology rich learning environment is addressed as a goal in thedistrict's Strategic Plan. In addition, goals related to writing, transitioning students,increasing scores on standardized tests and college preparedness have beenestablished. This plan, in its third full year, continues to drive professionaldevelopment, budgeting and curriculum development. The District began a one to oneinitiative for Chromebooks for grades seven and eight during this past year. We havecontinued with grade nine for the 2014-2015 school year and hope to complete the highschool for grades ten through twelve in the 2015-2016 school year

BUILDINGS & GROUNDS

The Audubon Board of Education continues to place a great emphasis on propermaintenance of the facilities. The district continues to budget for Capital Projects eachyear and the Buildings & Grounds Committee meets on a regular basis with theadministration to monitor the progress of the projects. The district has applied for a RODGrant for Roofing and HVAC replacement for the Haviland Avenue School. Work began inJuly and the project will be complete in the early fall.

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4. INTERNAL ACCOUNTING CONTROLS:

Management of the district is responsible for establishing and maintaining an internalcontrol structure designed to ensure that the assets of the District are protected from loss,theft or misuse and to ensure that adequate accounting data are compiled to allow for thepreparation of financial statements in conformity with generally accepted accountingprinciples (GAAP). The internal control structure is designed to provide reasonable, but notabsolute, assurance that these objectives are met. The concept of reasonable assurancerecognizes that: (1) the cost of a control should not exceed the benefits likely to be derived;and (2) the valuation of costs and benefits requires estimates and judgments bymanagement.

As a recipient of federal and state financial assistance, the District also is responsible forensuring that an adequate internal control structure is in place to ensure compliance withapplicable laws and regulations related to those programs. This internal control structure isalso subject to periodic evaluation by the District management.

As part of the District's single audit described earlier, tests are made to determine theadequacy of the internal control structure, including that portion related to federal and statefinancial assistance programs, as well as to determine that the District has complied withapplicable laws and regulations.

5. BUDGETARY CONTROLS:

In addition to internal accounting controls, the District maintains budgetary controls. Theobjective of these budgetary controls is to ensure compliance with legal provisionsembodied in the annual appropriated budget approved by the voters of the municipality.Annual appropriated budgets are adopted for the general fund, the special revenue fund,and the debt service fund. Project-length budgets are approved for the capitalimprovements accounted for in the capital projects fund. The final budget amount asamended for the fiscal year is reflected in the financial section.

6:ACCOUNTING SYSTEM AND REPORTS:

The District's accounting records reflect generally accepted accounting principles, aspromulgated by the Governmental Accounting Standards Board (GASB). The accountingsystem of the District is organized on the basis of funds and account groups. These fundsand account groups are explained in "Notes to the Financial Statements", Note 1.

10. RISK MANAGEMENT:

The Board carries various forms of insurance, including but not limited to general liability,automobile liability and comprehensive/collision, hazard and theft insurance on propertyand contents, and fidelity bonds.

11. OTHER INFORMATION:

a) Independent Audit - State statutes require an annual audit by independent certifiedpublic accountants or registered municipal accountants. The accounting firm of Inversoand Stewart, RMAlCPAs, was selected by the Board's a~dit committee. In addition to

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meeting the requirements set forth in state statutes, the audit also was designed to meetthe requirements of the Single Audit Act of 1984 and the related OMB Circular A-128 andstate Treasury Circular Letter 98-07 OMB. The auditor's report on the general purposefinancial statements and combining and individual fund statements and schedules isincluded in the financial section of this report. The auditor's reports related specifically tothe single audit are included in the single audit section of this report.

12. ACKNOWLEDGMENTS:

We would like to express our appreciation to the members of the Audubon Board ofEducation for their concern in providing fiscal accountability to the citizens and taxpayers ofthe school district and thereby contributing their full support to the development andmaintenance of our financial operation. The preparation of this report could not have beenaccomplished without the efficient and dedicated services of our financial and accountingstaff.

Respectfully submitted,

~. c::Pdrt/#Robert DelengowskiBoard Secretary

Steven C. CrispinSuperintendent

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AUDUBON BOARD OF EDUCATIONOrganizational Chart

(Unit Control)

Superi ntendent

!

M

t BuI Admln

supBuild

ansion Avenue GrSchool

Principal HavilandAvenueSchool

Principal CuMain

DistricSpecia

Educatio

sinessnlstrator

jervisoringsandounds

stodial/tenance

High SchoolPrincipal

11

AssistantPrincipal

Guidance Athletics

lS.A.C.

7

AUDUBON SCHOOL DISTRICT

Members of the Board of Education:

Pat Yacovelli, PresidentRobert Lee, Vice PresidentMarianne BrownTara Sullivan-ButricaAllison CoxAmmie DavisMelissa GaspariCheryl HauskeKathryn SullivanJoan Greenwood

Other Officials:

Roster of OfficialsJune 30, 2014

Edward Wasilewski, Interim SuperintendentRobert Delengowski, Business Administrator/Board SecretaryMary Lynam, TreasurerFrank Cavallo, Esq. Solicitor

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Term Expires

201420162014201520152016201420152016

Mount Ephraim Representative

Attorney

AUDUBON SCHOOL DISTRICTConsultants and Advisors

Audit Firm

Inverso & Stewart, LLC651 Route 73 North, Suite 402

Marlton, NJ 08053

Frank Cavallo, EsquireActing for Parker! McCay

Suite 104 Three Greentree CentreMarlton, NJ 08053

Official Depository

Susquehanna Patriot Bank, NA40 South White Horse Pike

Audubon, NJ 08106

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Financial Section

INVERSO & STEWART, LLCCertified Public Accountants

651 Route 73 North, Suite 402Marlton, New Jersey 08053(856) 983-2244Fax (856) 983-6674E-Mail: [email protected]

-Member of-American Institute of CPAsNew Jersey Society of CPAs

INDEPENDENT AUDITOR'S REPORT

The Honorable President and Membersof the Board of Education

Audubon School DistrictCounty of CamdenAudubon, New Jersey

Report on the Financial Statements

I have audited the accompanying financial statements of the governmental activities, the business-type activities, eachmajor fund and the aggregate remaining fund information of the Audubon School District, in the County of Camden, Stateof New Jersey, as of and for the fiscal year ended June 30, 2014, and the related notes to the financial statements, whichcollectively comprise the School District's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance withaccounting principles generally accepted in the United States of America; this includes the design, implementation andmaintenance of internal control relevant to the preparation and fair presentation of financial statements that are free frommaterial misstatement, whether due to fraud or error.

Auditor's Responsibility

My responsibility is to express opinions on these financial statements based on my audit. I conducted my audit inaccordance with auditing standards generally accepted in the United States of America; the standards applicable tofinancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; andin compliance with audit requirements as prescribed by the Office of School Finance, Department of Education, State ofNew Jersey. Those standards require that I plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the School District's preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the School District's internal control. Accordingly, I express no such opinion. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of significant accountingestimates made by management, as well as evaluating the overall presentation of the financial statements.

I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinions.

Opinions

In my opinion, the financial statements referred to above present fairly, in all material respects, the respective financialposition of the governmental activities, the business-type activities, each major fund and the aggregate remaining fundinformation of the Audubon School District, in the County of Camden, State of New Jersey, as of June 30, 2014, and therespective changes in financial position and where applicable, cash flows thereof for the year then ended in accordancewith accounting principles generally accepted in the United States of America.

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Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management's discussion andanalysis and budgetary comparison information as listed in the table of contents be presented to supplement the basicfinancial statements. Such information, although not a part of the basic financial statements, is required by theGovernmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing thebasic financial statements in an appropriate operational, economic, or historical context. I have applied certain limitedprocedures to the required supplementary information in accordance with auditing standards generally accepted in theUnited States of America, which consisted of inquires of management about the methods of preparing the information andcomparing the information for consistency with management's responses to my inquiries, the basic financial statements,and other knowledge I obtained during my audit of the basic financial statements. I do not express an opinion or provideany assurance on the information because the limited procedures do not provide me with sufficient evidence to express anopinion or provide any assurance.

Other Information

My audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise theAudubon School District's basic financial statements. The accompanying combining statements and related major fundsupporting statements and schedules and Schedules of Expenditures of Federal Awards and State Financial Assistance,as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations and State of New Jersey OMB's Circular 04-04, Single Audit Policy for Recipients of Federal Grants,State Grants and State Aid, are presented for purposes of additional analysis and are not a required part of the financialstatements.

The accompanying combining statements and related major fund supporting statements and schedules and Schedules ofExpenditures of Federal Awards and State Financial Assistance are the responsibility of management and were derivedfrom and relate directly to the underlying accounting and other records used to prepare the basic financial statements.Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements andcertain additional procedures, including comparing and reconciling such information directly to the underlying accountingand other records used to prepare the basic financial statements or to the basic financial statements themselves, and otheradditional procedures in accordance with auditing standards generally accepted in the United States of America. In myopinion, the information described in the previous paragraph is fairly stated, in all material respects, in relation to the basicfinancial statements taken as a whole.

The introductory section and statistical section have not been subjected to the auditing procedures applied in the audit ofthe basic financial statements and, accordingly, I do not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, I have also issued my report dated October 24, 2014 on myconsideration of the Audubon School District's internal control over financial reporting and my tests of its compliance withcertain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is todescribe the scope of my testing of internal control over financial reporting and compliance and the results of that testing,and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integralpart of an audit performed in accordance with Government Auditing Standards in considering the Audubon School District'sinternal control over financial reporting and compliance.



(}r/J)-Robert P. InversoCertified Public AccountantPublic School Accountant

Marlton, New JerseyOctober 24, 2014

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K-l


851 Route 73 North, Suite 402Marlton, New Jersey 08053(856) 983-2244Fax (856) 983-6674E-Mail: [email protected]

-Member of-American Institute of CPAsNew Jersey Society of CPAs

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTINGAND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF

FINANCIAL STATEMENTS PERFORMED IN ACCORDANCEWITH GOVERNMENT AUDITING STANDARDS




I have audited, in accordance with the auditing standards generally accepted in the United States of America and thestandards applicable to financial audits contained in the Government Auditing Standards, issued by the ComptrollerGeneral of the United States; and the audit requirements as prescribed by the Office of School Finance, Department ofEducation, State of New Jersey, the financial statements of the governmental activities, the business-type activities, eachmajor fund, and the aggregate remaining fund lnformatlon of the Audubon School District, in the County of Camden, Stateof New Jersey, as of and for the year ended June 30, 2014, and the related notes to the financial statements, whichcollectively comprise the School District's basic financial statements, and have issued my report thereon dated October 24,2014.

Internal Control Over Financial Reporting

In planning and performing my audit of the financial statements, I considered the Audubon School District's internal controlover financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for thepurpose of expressing my opinions on the financial statements, but not for the purpose of expressing an opinion on theeffectiveness of the School District's internal control, Accordingly, I do not express an opinion on the effectiveness of theAudubon School District's internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees,in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timelybasis. A material weakness is a deficiency, or combination of deficiencies, in internal control, such that there is areasonable possibility that a material misstatement of the School District's financial statements will not be prevented, ordetected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, ininternal control that is less severe than a material weakness, yet important enough to merit attention by those charged withgovernance.

My consideration of internal control was for the limited purpose described in the first paragraph of this section and was notdesigned to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Giventhese limitations, during my audit I did not identify any deficiencies in internal control that I consider to be materialweaknesses. However, material weaknesses may exist that have not been identified.

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K-lCompliance and Other Matters

As part of obtaining reasonable assurance about whether the Audubon School District's financial statements are free ofmaterial misstatement, I performed tests of its compliance with certain provisions of laws, regulations, contracts and grantagreements, noncompliance with which could have a direct and material effect on the determination of financial statementamounts. However, providing an opinion on compliance with those provisions was not an objective of my audit and,accordingly, I do not express such an opinion. The results of my tests disclosed no instances of noncompliance or othermatters that are required to be reported under Government Auditing Standards and audit requirements as prescribed bythe Office of School Finance, Department of Education, State of New Jersey.

Purpose of this Report

The purpose of this report is solely to describe the scope of my testing of internal control and compliance and the results ofthat testing, and not to provide an opinion on the effectiveness of the School District's internal control or on compliance.This report is an integral part of an audit performed in accordance with Government Auditing Standards and auditrequirements as prescribed by the Office of School Finance, Department of Education, State of New Jersey in consideringthe School District's internal control and compliance. Accordingly, this communication is not suitable for any otherpurpose.



Robert P. InversoCertified Public AccountantPublic School Accountant


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Required Supplementary Information - Part I

Management's Discussion and Analysis

Audubon School DistrictManagement's Discussion and AnalysisFor the Fiscal Year Ended June 30,2014

As management of the Board of Education of the Borough of Audubon, New Jersey (SchoolDistrict), we offer readers of the School District's financial statements this narrative overview andanalysis of the School District for the fiscal year ended June 30, 2014. We encourage readers toconsider the information presented in conjunction with additional information that we havefurnished in our letter of transmittal, which can be found in the introductory section of this report.

Financial Highlights

• The assets of the School District exceeded its liabilities at the close of the mostrecent fiscal year by $11,338,256 (net position).

• Governmental activities have an unrestricted net position deficit of $1,312,237. Theaccounting treatment in the governmental funds for compensated absences payable,accrued interest payable, the June state aid payments, and state statutes thatprohibit school districts from maintaining more than 2% of its adopted budget asunrestricted fund balance are primarily responsible for this deficit balance.

• The total net position of the School District increased by $721,070 or a 6.79%increase from the prior fiscal year-end balance. The majority of the reason for theincrease was the payment of long-term liabilities.

• Fund balance of the School District's governmental funds increased by $21,269resulting in an ending fund balance of $575,214. The main reason for the increase isresults of operations in the general fund.

• Business-type activities have unrestricted net position of $187,347, which may beused to meet the School District's ongoing obligations of the enterprise-relatedactivities.

• The School District's long-term obligations decreased by $1,145,513 which is theresult of current year payments on existing debt obligations and a decrease incompensated absences payable.

Overview of the Basic Financial Statements

This discussion and analysis is intended to serve as an introduction to the School District's basicfinancial statements. Comparison to the prior year's activity is provided in this document. Thebasic financial statements are comprised of three components: 1) District-wide financialstatements, 2) Fund financial statements, and 3) Notes to the basic financial statements. Thisreport also contains other supplementary information in addition to the basic financial statementsthemselves.

District-wide Financial Statements

The district-wide financial statements are designed to provide the reader with a broad overview ofthe financial activities in a manner similar to a private-sector business. The district-wide financialstatements include the statement of net position and the statement of activities.

The statement of net position presents information about all of the School District's assets andliabilities. The difference between the assets and liabilities is reported as net position. Over time,

16

changes in net position may serve as a useful indicator of whether the financial position of theSchool District is improving or deteriorating.

The statement of activities presents information showing how the net position of the SchoolDistrict changed during the current fiscal year. Changes in net position are recorded in thestatement of activities when the underlying event occurs, regardless of the timing of related cashflows. Thus, revenues and expenses are reported in this statement even though the resultingcash flows may be recorded in a future period.

Both of the district-wide financial statements distinguish functions of the School District that aresupported from taxes and intergovernmental revenues (governmental activities) and otherfunctions that are intended to recover all or most of their costs from user fees and charges(business-type activities). Governmental activities consolidate governmental funds including theGeneral Fund, Special Revenue Fund, Capital Projects Fund, and Debt Service Fund. Business-type activities consolidate the Food Service Fund, the Community Education Program Fund andthe After School Program Fund.

Fund Financial Statements

Fund financial statements are designed to demonstrate compliance with finance-relatedrequirements. A fund is a grouping of related accounts that is used to maintain control overresources that have been segregated for specific objectives. All of the funds of the SchoolDistrict are divided into three categories: governmental funds, proprietary funds and fiduciaryfunds.

Governmental funds account for essentially the same information reported in the governmentalactivities of the district-wide financial statements. However, unlike the district-wide financialstatements, the governmental fund financial statements focus on near-term financial resourcesand fund balances. Such information may be useful in evaluating the financing requirements inthe near term.

Since the governmental funds and the governmental activities report information using the samefunctions, it is useful to compare the information presented. Because the focus of each reportdiffers, a reconciliation is provided on the fund financial statements to assist the reader incomparing the near-term requirements with the long-term needs.

The School District maintains four individual governmental funds. The major funds are theGeneral Fund, the Special Revenue Fund, the Capital Projects Fund, and the Debt Service Fund.They are presented separately in the fund financial statements.

The School District adopts an annual appropriated budget for the General Fund, Special RevenueFund and the Debt Service Fund. A budgetary comparison statement has been provided for eachof these funds to demonstrate compliance with budgetary requirements.

Proprietary funds are used to present the same functions as the business-type activitiespresented in the district-wide financial statements. The School District maintains one type ofproprietary fund - the Enterprise Fund. The fund financial statements of the enterprise fundprovides the same information as the district-wide financial statements, only in more detail.

The School District's three enterprise funds (Food Service Fund, Community Education ProgramFund and After School Program Fund) are listed individually and are considered to be majorfunds.

Fiduciary funds are used to account for resources held for the benefit of parties outside thegovernment. Fiduciary funds are not reflected in the district-wide financial statements becausethe resources of those funds are not available to support the School District's programs.

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Notes to the Basic Financial Statements

The notes to the basic financial statements provide additional information that is essential to a fullunderstanding of the data provided in the basic financial statements.

Other Information

In addition to the basic financial statements and accompanying notes, this report also containsother supplementary information and schedules required by the New Jersey Audit Program,issued by the New Jersey Department of Education.

District-wide Financial Analysis

The assets of the School District are classified as current assets and capital assets. Cash,investments, receivables, inventories and prepaid expenses are current assets. These assetsare available to provide resources for the near-term operations of the School District. Themajority of the current assets are the results of the tax levy and state aid collection process.

Capital assets are used in the operations of the School District. These assets are land, buildings,improvements and equipment. Capital assets are discussed in greater detail in the section titled,Capital Assets and Debt Administration, elsewhere in this analysis.

Current and long-term liabilities are classified based on anticipated liquidation either in the near-term or in the future. Current liabilities include accounts payable, accrued salaries and benefits,unearned revenues, and current debt obligations. The liquidation of current liabilities isanticipated to be either from currently available resources, current assets or new resources thatbecome available during fiscal year 2015. Long-term liabilities such as long-term debt obligationsand compensated absences payable will be liquidated from resources that will become availableafter fiscal year 2014.

The assets of the primary government activities exceeded liabilities by $11,132,361 with anunrestricted deficit balance of $1,312,237. The net position of the primary government does notinclude internal balances. '

A net investment of $11,602,230 in land, improvements, buildings, equipment and vehicles whichprovide the services to the School District's public school students. Net position of $842,368 hasbeen restricted as follows:

Restricted for Future Budget Appropriations $Restricted for Future Capital ProjectsRestricted for Future Debt Service ObiligationsRestricted for Capital ReserveRestricted for Subsequent Year's Budget

192,85630,67718,497

115,228485,110

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Audubon School DistrictComparative Summary of Net Position

As of June 30, 2014 and 2013

Governmental Activities Business-Type Activities District-W ide2014 2013 2014 2013 2014 2013

ASSETSCurrent assets $ 2,595,467 $ 1,886,251 $ 91,712 $ 156,372 $ 2,687,179 $ 2,042,623Capital assets 2014561568 2019321754 18,548 231888 2014751116 20,956,642

Total assets 2310521035 221819,005 1101260 1801260 2311621295 22z999z265

LIABILITIESCurrent liabilities 2,830,218 2,492,404 (95,635) (9,395) 2,734,583 2,483,009Noncurrent liabilities 9,089,456 9,899,070 9,089,456 9,899,070

Total liabilities 11,919,674 12,391,474 {95,635) {9z395} 11,824,039 121382,079

Net Position $11,132,361 $10,427,531 $ 205,895 $ 189.655 $11,338,256 $10,617,186.

Net Position Consists of:Net investment in

Capital Assets $11,602,230 $11,049,885 $ 18,548 $ 23,888 $11,620,778 $11,073,773Restricted Assets 842,368 771,904 842,368 771,904Unrestricted Assets {1,312,237) {11394z258} 187,347 165.767 {1 ,124,890} {1,228,491}

Net Position $11,132,361 . $10,427.531 $ 205,895 $ 189,655 , , $11,338,256 $10,617,186.

Governmental Activities

Governmental activities increased the net position of the School District by $704,830 during thecurrent fiscal year. Key elements of the increase in net position for governmental activities are asfollows:

• Long-term debt obligations were reduced by $1,145,513 accounting for themajority of the increase in net position.

Business-type Activities

Business-type activities increased the School District's net position by $16,240. Key elements ofthe increase in net position for business-type activities are as follows:

• The Food Service Fund operated at a loss of $29,137 for this fiscal year beforeaccounting for a transfer from the operating fund of $38,000. The net positionbalance at June 30, 2014 for the food service fund was $39,292.

• The Community Education Program Fund operated at a profit of $7,601 for thisfiscal year. The net position balance at June 30, 2014 for the communityeducation program fund was $142,684.

• The After School Fund operated at a loss of $224 for this fiscal year. The netposition balance at June 30, 2014 for the after school fund was $23,919.

19

Audubon School DistrictComparative Schedule of Changes in Net position

As of and for the Fiscal Year Ended June 30,2014 and 2013

Revenues:Charges for servicesOperating grants and

contributionsProperty taxesState aid - unrestrictedOther revenues

Total Revenues

Expenses:Governmental Activities:

InstructionTuitionRelated servicesAdministrative servicesOperations and

MaintenanceTransportationEmployee benefitsInterest on debtOther

Business-Type Activities:Food ServiceCommunity EducationAfter School Program

Total EpensesIncrease (Decrease) in NetPosition before transfers

TransfersChange in Net PositionNet Position, July 1Net Position, June 30

Governmental Activities2014 2013

$ 2,679,181

2,661,88811,476,1498,196,226

279,31325,292,757

10,447,282918,019

2,404,0251,888,003

1,928,504366,696

5,697,808274,846624,744

24,549,927

742,830(38,000)704,830

10,427,531$ 11,132,361

$ 2,749,838

2,919,69011,048,6847,455,220

263,24324,436,675

9,972,132913,270

2,270,8381,941,238

1,753,205350,664

5,909,43370,205

896,537

24,077,522

359,153(30,000)329,153

10,098,378$10,427,531

Business-Type Activities2014 2013

$ 460,469

173,809

634,370

448,963101,462105,705656,130

(21,760)38,00016,240

189,655$ 205,895 .

$ 457,782

162,848

92 5,803626',433

437,162100,834104,917642,913

(16,480)30,00013,520

176,135$ 189,655

Financial Analysis of the Governmental Funds

District-Wide2014 2013

$ 3,139,650

2,835,69711,476,1498,196,226

279,40525,927,127

10,447,282918,019

2,404,0251,888,003

1,928,504366,696

5,697,808274,846624,744

448,963101,462105,705

25,206,057

721,070

$ 3,207,620

3,082,53811,048,6847,455,220

269,04625,063,108 .

9,972,132913,270

2,270,8381,941,238

1,753,205350,664

5,909,43370,205

896,537

437,162100,834104,917

24,720,435

342,673

721,070 342;67310,617,186 10.274,5-13

$ 11,338,256 . $ 10,617,186

As noted earlier, the School District uses fund accounting to ensure and demonstrate compliancewith finance-related legal requirements.

Governmental Funds - The focus of the School District's governmental funds is to provideinformation on near-term inflows, outflows, and balances of spend able resources. Suchinformation is useful in assessing the School District's financing requirements. In particular,unreserved fund balance may serve as a useful measure of a government's net resourcesavailable for spending at the end of the fiscal year.

As of the end of the current fiscal year, the School District's governmental funds reported acombined ending fund balance of $575,214, an increase of $21,269 in comparison with the prioryear. Results of operations in the general fund are the main reason for the increase.

20

The unreserved fund balance for the School District at the end of the fiscal year represents theunreserved deficit fund balance for the General Fund of $267,154. The remainder of the fundbalance is reserved to indicate that it is not available for new spending because it has alreadybeen committed as follows, 1) appropriated as a revenue source in the subsequent year's budget($485,110), 2) reserved for future debt service obligations ($18,497), 3) reserved for capitalprojects expenditures ($145,905), or reserved for future appropriation in accordance with statestatutes ($192,856).

The general fund is the chief operating fund of the School District. As discussed earlier, thedeficit balance in the unreserved fund balance is due, primarily, to the accounting treatment of theJune state aid payments as discussed in the notes to the basic financial statements, and statestatutes that prohibit New Jersey school districts from maintaining more than 2% of its adoptedbudget as unrestricted fund balance.

Revenue in the special revenue fund is generally recognized at the time that the outlays areidentified; therefore no fund balances are normally generated in the special revenue fund.

General Fund Budgetary Highlights

At the end of the current fiscal year, unreserved fund balance (budgetary basis) of the generalfund was $492,203, while total fund balance (budgetary basis) was $1,285,397. As a measure ofthe general fund's liquidity, it may be useful to compare both unreserved fund balance (budgetarybasis) and total fund balance (budgetary basis) to total general fund expenditures. Actual(budgetary basis) expenditures of the General Fund including other financing uses amounted to$23,399,458. Unreserved fund balance (budgetary basis) represents 2.10% of expenditureswhile total fund balance (budgetary basis) represents 5.49% of that same amount.

Capital Assets and Debt Administration

The School District's investment in capital assets for its governmental and business-type activitiesas of June 30, 2014, totaled $20,475,116 (net of accumulated depreciation). This investment incapital assets includes land, improvements, buildings and equipment. The total decrease in theSchool District's investment in capital assets for the current fiscal year was $481,526.

Major capital assets events during the current fiscal year included the following:

• Depreciation expense for the current fiscal year was $691,157.• Current year additions were $209,631

Capital Assets (net of accumulated depreciation)June 30,2014 and 2013

Governmental Activities2014 2013

Business-Typel Activities2014 2013

District-Wide2014 2013

Land $ 764,000 $ 764,000 $ 764,000 $ 764,000Const. in ProgressSite Improvements 717,478 656,482 717,478 656,482Building and Building

Improvements 18,379,176 18,914,374 18,379,176 18,914,374Equipment 595,914 597,898 $ 18,548 $ 23,888 614,462 621,786

Total $ 20,456,568 $ 20,932,754 $ 18,548 $ 23,888 $ 20,475,116 $ 20,956,642

Additional information on the School District's capital assets can be found in the notes to thebasic financial statements (Note 5) of this report.

21

Long-term debt - During the fiscal year ended June 30, 2014, the School District had totalbonded debt outstanding of $8,670,000 backed by the full faith and credit of the School District.Additionally, the School District has long-term obligations for capital leases in the amount of$184,338 and compensated absences balance of $927,750 outstanding at the end of the currentfiscal year.

General Obligation Bonds for the School District decreased by $970,000, reflecting debt servicepayments made during the year.

State statutes limit the amount of general obligation debt that the District may issue. At the end ofthe current fiscal year, the legal debt limit was $29,403,427 and the legal debt margin was$20,733,427.

Additional information on the School District's long-term obligations can be found in the notes tothe basic financial statements (Note 7) of this report.

Economic Factors and Next Year's Budgets and Rates

The following factors were considered and incorporated into the preparation of the SchoolDistrict's budget for the 2014-2015 fiscal year.

• The 2014-2015 budget decreased by $21,809 (0.93%) over the previous year's budget.Of this decrease, $253,000 was generated by a decrease in debt service payments. Also,$258,945 was generated by a reduction in capital outlay expenditures. The general fundbudget increased by $402,428

• In April 2011, the Audubon School District was chosen to participate in the Inter-DistrictPublic School Choice Program. This program has been very successful for the district.From a financial standpoint, the district received an increase of $53,712, resulting in$922,056 in state aid for these students for the 2014-15 school year. The additionalrevenue has allowed the district to enhance current programs, while maintaining the localtax rate at or below cap.

• The Audubon School District has committed itself to strong financial controls. TheBusiness office continually monitors spending requests in relation to the district budgetand is committed to review its business practices in order to maximize revenues andgenerate a budget surplus each year. Additionally, the district is looking to improve itsuse of technology in the coming years in an effort to meet all future educationalchallenges.

Requests for Information

This financial report is designed to provide a general overview of the School District's finances forall those with an interest in the School District. Questions concerning any of the informationprovided in this report or requests for additional financial information should be addressed to theAudubon School District Business Administrator, 350 Edgewood Avenue, Audubon, New Jersey,08106, telephone number (856) 547-1716.

22

Basic Financial Statements

District-Wide Financial Statements

A·1AUDUBON SCHOOL DISTRICT

Statement of Net PositionJune 30, 2014

Governmental Business· TypeActivities Activities Total

ASSETS:Cash and cash equivalents $ 756,001 $ 65,156 $ 821,157Receivables, net 1,724,238 15,777 1,740,015Inventory 10,779 10,779Restricted assets:

Cash and cash equivalents 115,228 115,228Capital assets, net (Note 5) 20,456,568 18,548 20,475,116

Total Assets 23,052,035 110,260 23,162,295

LIABILITIES:Accounts payable 509,798 509,798Internal balance 95,763 (95,763)State aid anticipation note payable 759,357 759,357Other liabilities 655,335 128 655,463Accrued interest payableNoncurrent liabilities (Note 7):

Due within one year 809,965 809,965Due beyond one year 9,089,456 9,089,456

Total Liabilities 11,919,674 (95,635) 11,824,039

NET POSITION:Net investment in capital assets 11,602,230 18,548 11,620,778Restricted for:

Capital projects 145,905 145,905Other purposes 696,463 696,463

Unrestricted (1,312,237) 187,347 (1 1124,890)

Total Net Position $ 11,132,361 $ 205,895 $ 11,338,256

The accompanying Notes to the Basic Financial Statements are an integral part of this statement.

25

A-2

AUDUBON SCHOOL DISTRICTStatement of Activities


Net (Expense) Revenue andProgram Revenues Changes in Net Position

Operating CapitalCharges for Grants and Grants and Governmental Business-Type

FunctionslProsrams Ex~nses Services Contributions Contributions Activities Activities Total

Governmental Activities:Instruction:

Regular $ 7,186,016 $ 2,679,181 $ 175,516 $ (4,331,319) $ (4,331,319)Special Education 2,140,613 367,471 (1,n3,142) (1,773,142)Other instruction 1,120,653 (1,120,653) (1,120,653)

Support Services:Tuition 918,019 (918,019) (918,019)Student & instruction related services 2,404,025 53,762 (2,350,263) (2,350,263)General administrative services 346,080 (346,080) (346,080)School administrative services 1,000,431 (1,000,431) (1,000,431 )Central administrative services 541,492 (541,492) (541,492)Plant operations and maintenance 1,928,504 (1,928,504) (1,928,504)

I\) Pupil transportation 366,696 (366,696) (366,696)en Unallocated employee benefits 5,697,808 1,969,629 (3,728,179) (3,728,179)Interest on long-term debt 274,848 95,510 (179,336) (179,336)Unallocated depreciation and amortization 624,744 (624,744) (624,744)

Total Govemmental Activities 24,549,927 2,679,181 2,661,888 (19,208,858) (19,208,858)

Business-Type Activities:Food service 448,963 246,017 173,809 $ (29,137) (29,137)Community education program 101,462 108,971 7,509 7,509After school program 105,705 105,481 (224) (224)Total Business-Type Activities 656,130 460.469 173,809 (21,852) (21,852)

Total Primary Government $ 25.206,057 $ 3.139.650 ~2,835,697 ~ (19,208,858) (21,852) (19,230,710)

General Revenues:Taxes:

Property taxes, levied for general purposes, net 10,312,579 10,312,579Taxes levied for debt service 1,163,570 1,163,570

Federal and State aid not restricted 8,196,226 8,196,226Miscellaneous Income 279,313 92 279,405

Special Items:Transfer (36,000) 38,000

Total general revenues, special items, extraordinary items and transfers 19,913,688 38,092 19,951,780Change in Net Position 704,830 16,240 721,070Net Position - June 30, 2013 10,427,531 189,655 10,617,186Net Position - June 30, 2014 $ 11,132,361 $ 205,895 ~ 11,338,256


Fund Financial Statements

B-1AUDUBON SCHOOL DISTRICT

Balance SheetGovernmental Funds

June 30, 2014

Special Capital Debt TotalGeneral Revenue Projects Service Governmental

ASSETS Fund Fund Fund Fund Funds

Assets:Cash and cash equivalents $ 756,001 $ $ $ $ 756,001

Receivables, net:District tax levy 67,670 1,163,570 1,231,240State aid 141,197 63,390 204,587Federal aid 164,774 164,774Other 123,637 123,637Interfund 1,315,701 1,315,701

Restricted assets:Cash and cash equivalents 115,228 115,228

Total Assets 2,519,434 164.774 63.390 1.163.570 3,911.168

LIABILITIES AND FUND BALANCESLiabilities:Accounts payable 482,759 27,039 509,798Interfund payable 720,763 137,735 32,713 1,145,073 2,036,284State aid anticipation note payable 759,357 759,357Other liabilities 30,515 30.515

Total Liabilities 1~993,394 164,774 32.713 1,145,073 3,335,954

Fund Balances:Restricted for:

Excess surplus 192,856 192,856Excess surplus - designated for

subsequent year's budget 112.272 112,272Capital reserve 115,228 115,228

Assigned to:Subsequent year's budget 372,838 18,497 391,335

Unassigned (267,154) 30,677 (236,477)

Total Fund Balances 526.040 30,677 18,497 575,214

Total Liabilities and Fund Balances $ 2.519,434 $ 164.774 $ 63,390 $ 1.163.570

Amounts reported for governmental activities in the statement of net position(A-1) are different because:

Capital assets used in governmental activities are not financial resourcesand therefore are not reported in the funds. The cost of the assets is$30,672,557 and the accumulated depreciation is $10,215,989. 20,456,568

Long-term liabilities, including bonds payable, are not due and payablein the current period and therefore are not reported as liabilities in thefunds:

General Obligation Bonds $ (8,670,000)Capital Lease Payable (184,338)Accrued Interest Payable (117,333)Compensated Absences Payable (927,750)

!O!8Q9,421'l

Net position of governmental activities $ 11.132,361


28


Statement of Revenues, Expenditures and Changes in Fund BalancesGovernmental Funds


Special Capital Debt TotalGeneral Revenue Projects Service Governmental

Fund Fund Fund Fund FundsREVENUES:Local sources:

Local tax levy $ 10,312,579 $1,163,570 $ 11,476,149Tuition 2,679,181 2,679,181Capital reserve interest 115 115Miscellaneous 279,198 279,198

Total local sources 13,271,073 1,163,570 14,434,643

State sources 10,110,572 95,510 10,206,082Federal sources 39,082 $ 612,950 652,032

Total Revenues 23,420,727 612,950 1,259,080 25,292,757

EXPENDITURES:Current expense:

Regular instruction 7,104,111 175,516 7,279,627Special education instruction 1,773,142 367,471 2,140,613Other instruction 1,120,653 1,120,653Support services and undistributed costs:

Tuition 918,019 918,019Student & instruction related services 2,350,263 53,762 2,404,025General administrative services 345,800 345,800School administrative services 1,000,431 1,000,431Central administrative services 541,492 541,492Plant operations and maintenance 1,756,430 1,756,430Pupil transportation 350,902 350,902Unallocated employee benefits 5,681,607 16,201 5,697,808

Capital outlay 418,608 418,608Debt service:

Principal 970,000 970,000Interest and other charges 289,080 289,080

Total Expenditures 23,361,458 612,950 1,259,080 25,233,488

Excess (deficiency) of revenues over(under) expenditures 59,269 59,269

Other Financing Sources (Uses):Transfers out {38,000l {3S,0001

Total other financing sources (uses) (38,000) (38,000)

Net Change in Fund Balance 21,269 21,269Fund balance - July 1, 2013 504,771 $ 30,677 184;97 553,945

Fund Balance - June 30, 2014 m 526,040 $ $ 30,677 !li 18,497 m 575,214


29


Reconciliation of the Statement of Revenues, Expendituresand Changes in Fund Balances of Governmental Funds

to the Statement of ActivitiesFor the Fiscal Year Ended June 30, 2014

Total net change in fund balances - governmental funds (from B-2) $ 21,269

Amounts reported for governmental activities in the statement of activities (A-2)are different because:

Governmental Funds report capital outlays as expenditures. However, in thestatement of activities, the cost of those assets is allocated over their estimateduseful lives as depreciation expense. This is the amount by which capitaloutlays exceeded depreciation in the current period.

Depreciation expenseFixed assets additions

$ (685,817)209,631 (476,186)

Repayment of long-term debt is an expenditure in the governmental funds,but the repayment reduces long-term liabilities in the statement of net positionand is not reported in the statement of activities. 970,000

Interest on long-term debt in the statement of activities is accrued, regardlessof when due. In the governmental funds, interest is reported when due. Thisamount is the net effect of the difference in the treatment of interest onlong-term debt. 14,234

Repayment of capital lease principal is an expenditure in the governmental funds,But the repayment reduces long-term liabilities in the statement of net position andis reported in the statement of activities. 58,531

In the statement of activities, certain operating expenses, (e.g. compensatedabsences) are measured by the amounts earned during the year. In thegovernmental funds, however, expenditures for these items are reported in theamount of financial resources used (paid). When the earned amount exceedsthe paid amount, the difference is a reduction in the reconciliation (-); whenthe paid amount exceeds the earned amount the difference is an addition tothe reconciliation (+) 116,982

Change in net position of governmental activities $ 704,830


30


Statement of Net PositionProprietary Funds

June 30, 2014

Business-Type ActivitiesEnterprise Funds

Food Community AfterService Education SchoolFund Program Program Total

ASSETS:

Current Assets:Cash and cash equivalents $ $ 67,684 $ 23,919 $ 91,603Intergovernmental receivables

State 452 452Federal 8,286 8,286Inteliund 20,763 75,000 95,763Other 7,039 7,039

Inventories 10,779 10,779

Total current assets 47,319 142,684 23,919 213,922

Noncurrent assets:Machinery and equipment (net of

accumulated depreciation) 18,548 18,548

Total noncurrent assets 18,548 18,548

Total Assets 65,867 142,684 23,919 232,470

LIABILITIES:Current liabilities:

Cash overdraft 26,447 26,447Unearned revenue 128 128

Total Current Liabilities 26,575 26,575

NET POSITION:Net Investment in capital assets 18,548 18,548Unrestricted 20,744 142,684 23,919 187,347

Total Net Position $ 39,292 $ 142,684 $ 23,919 ~ 205,895


31


Statement of Revenues, Expenses and Changes in Fund Net PositionProprietary Funds

For the Fiscal Year Ended June 30, 2014


Food Community AfterService Education School

Fund Program Program TotalsOperating Revenues:

Charges for services:Daily sales:

Reimbursable programs $ 107,375 $ 107,375Non-reimbursable programs 138,642 138,642

Program fees $ 108,971 $ 105,481 214,452

Total Operating Revenue 246,017 108,971 105,481 460,469

Operating Expenses:Salaries and fringe benefits 227,506 30,845 105,044 363,395Management fee 22,631 22,631Supplies and materials 14,526 661 15,187Other costs 12,709 12,709Depreciation 5,340 5,340Cost of sales 166,251 70,617 236,868

Total Operating Expenses 448,963 101,462 105,705 656,130

Operating Income (Loss) (202,946} 7,509 {224} (195,661 ~

Non-Operating Revenues:State sources:

State school lunch program 4,128 4,128Federal sources:

National school lunch program 137,014 137,014National school breakfast program 8,284 8,284Food distribution program 24,383 24,383

Local sources:Interest earned 92 92

Total Non-Operating Revenues 173,809 92 173,901

Income (Loss) before Contributions and Transfers (29,137) 7,601 (224) (21,760)

Operating Transfers In 38,000 38,000

Change in Net Position 8,863 7,601 (224) 16,240Net Position - July 1, 2013 30,429 135,083 24,143 189,655

Net Position - June 30, 2014 $ 39,292 $ 142,684 ~ 23,919 . m 205,895


32


Statement of Cash FlowsProprietary Funds




Fund Program Program TotalCash Flows from Operating Activities:

Cash receipts from customers $ 244,666 $ 108,972 $ 105,481 $ 459,119Cash payments to employees for services (227,506) (30,846) (105,044) (363,396)Cash payments to suppliers for goods

and services (227,079) (70,617) (661) (298,357)

Net cash used by operating activities (209,919) 7,509 (224) (202,634)

Cash Flows from Noncapital Financing Activities:Cash received from state sources 4,104 4,104Cash received from federal sources 167,962 167,962Operating transfer in 38,000 38,000

Net cash provided by noncapitalfinancing activities 210,066 210,066

Cash Flows used by Noncapital Financing Activities:Cash advance to General Fund (75,000) __ J~OOO)

Cash Flow Provided by Investing Activities:Interest on cash equivalents 92 92

Net increase (decrease) in cashand cash equivalents 147 (67,399) (224) (67,476)

Cash and cash equivalents - July 1, 2013 (26,594) 135,083 24,143 132,632

Cash and cash equivalents - June 30,2014 $ (26,447) $ 67,684 $ 23,919 $ 65,156

Reconciliation of operating income (loss)to net cash provided by (used for)

operating activities:Operating income (loss) $ (202,946) $ 7,509 $ (224) $ (195,661)Adjustments to reconcile operaling income

(loss) to cash provided by (used for)operating activities:

Depreciation 5,340 5,340Change in assets and liabilities:

(Increase) decrease in accounts receivable (1,479) (1,479)(Increase) decrease in inventory 406 406Increase (decrease) in Unearned Revenue 128 128Increase (decrease) in accounts payable (11,368) (11,368)

Net cash provided by (used for)operating activities ~ (209,919) ~ 7,509 ~ (224) ~ (202,634)

Noncash Noncapltal Financing Activities:During the year the District received $24,383 of food commodities from theU.S. Department of Agriculture. .


33

ASSETS:Cash and cash equivalentsInterfund receivable

Total Assets

LIABILITIES:Payroll deductions and withholdingsInterfund PayableDue to student groups

Total Liabilities

NET POSITION:Held in trust for unemployment

claims and other purposes

Held in trust for claims

Reserved for scholarships

AUDUBON SCHOOL DISTRICTStatement of Fiduciary Net Position

Fiduciary FundsJune 30,2014

Trust FundsUnemploymentCompensation

Trust

$ 50,126325,000

375,126

$ 375,126

FlexibleBenefitTrust

$ 1,791

Private PurposeScholarship

Fund

$ 112,723

112,723

$ 112,723


34

1,791

$ 1 791

B-7

AgencyFunds

$ 85,600300,000

385,600

$ 4,942180

380,478

$ 385,600


Statement of Changes in Fiduciary Net PositionFiduciary Funds


Unemployment Flexible Private PurposeCompensation Benefit Scholarship

Trust Trust FundADDITIONS:

ContributionsEmployee $ 13,679 $ 13,650

Donations $ 7,685Total Contributions 13,679 13,650 7,685

Interest earned on investments 636 4 114

Total Additions 14.315 13,654 7,799

DEDUCTIONS:Claims paid 21,224 13,674Scholarships awarded 11.926

Total Deductions 21.224 13.674 11.926

Change in Net Position (6,909) (20) (4,127)

Net Position - July 1, 2013 382,035 1,811 116,850

Net Position - June 30, 2014 $ 375.126 $ 1.791 $ 112.723

35

Audubon School DistrictNotes to Basic Financial Statements


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Reporting Entity - The Borough of Audubon School District ("School District") is a Type II district located in the County ofCamden, State of New Jersey. As a Type II district, the School District functions independently through a Board ofEducation. The Board of Education is comprised of nine members elected to three-year terms. These terms are staggeredso that three member's terms expire each year. The purpose of the School District is to provide educational services forresident students in grades K through 12. In addition, the School District provides educational services for students ingrades 9 through 12 received from the Mount Ephraim School District, on a tuition basis. The Audubon School District hasan approximate enrollment at June 30, 2014 of 1,410 students.

The primary criteria for including activities within the School District's reporting entity, as set forth in Section 2100 of theGovernmental Accounting Standards Board (GASB) Codification of Governmental Accounting and Financial ReportingStandards is the degree of oversight responsibility maintained by the School District. Oversight responsibility includesfinancial interdependency, selection of governing authority, designation of management, ability to significantly influenceoperations and accountability for fiscal matters. The combined financial statements include all funds of the School districtover which the Board exercises operating control.

Component Units - GASB Statement No. 14, The Financial Reporting Entity and GASB Statement No. 39, DeterminingWhether Certain Organizations are Component Unit, provide guidance that all entities associated with a primary governmentare potential component units and should be evaluated for inclusion in the financial reporting entity. A primary governmentis financially accountable not only for the organizations that make up its legal entity, but also for legally separateorganizations that meet the criteria established by GASB Statements No. 14 and No. 39. In addition, GASB Statement No.61, provides additional guidance for organizations that do not meet the financial accountability criteria for inclusion ascomponent units but that nevertheless should be included because the primary government's management determines thatit would be misleading to exclude them. There were no additional entities required to be included in the reporting entityunder the criteria as described above. Furthermore, the School District is not includable in any other reporting entity on thebasis of such criteria.

Basis of Presentation

The basic financial statements of the School District have been prepared in conformity with accounting principles generallyaccepted in the United States of America (GAAP) as applied to governmental units. The Governmental AccountingStandards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financialreporting principles. The more significant of the School District's accounting policies are described below.

The School District's basic financial statements consists of government-wide statements, including a statement of netposition and a statement of activities, and fund financial statements, which provide a more detailed level of financialinformation.

Government-wide Statements - The statement of net position and the statement of activities display informationabout the School District as a whole. These statements include the financial activities of the primary government,except for fiduciary funds. The statements distinguish between those activities of the School District that aregovernmental and those that are considered business-type activities. The statement of net position presents thefinancial condition of the governmental and business-type activities of the School District at fiscal year-end. Thestatement of activities presents a comparison between direct expenses and program revenues for each program orfunction of the School District's governmental activities and for the business-type activities of the School District.Direct expenses are those that are specifically associated with a service, program or department and, therefore,clearly identifiable to a particular function. The policy of the School District is to not allocate indirect expenses tofunctions in the statement of activities. Program revenues include charges paid by the recipient of the goods orservices offered by the program, grants and contributions that are restricted to meeting the operational or capitalrequirements of a particular program and interest earned on grants that is required to be used to support a particularprogram. Revenues, which are not classified as program revenues, are presented as general revenues of the SchoolDistrict, with certain limited exceptions. The comparison of direct expenses with program revenues identifies theextent to which each business segment or governmental function is self-financing or draws from the general revenuesof the School District.

Fund Financial Statements - During the fiscal year, the School District segregates transactions related to certainSchool District functions or activities in separate funds in order to aid financial management and to demonstrate legalcompliance. Fund financial statements are designed to present financial information of the School District at thismore detailed level. The focus of governmental and enterprise fund financial statements is on major funds. Eachmajor fund is presented in a single column. The fiduciary fund is reported by type. The School District uses funds tomaintain its financial records during the fiscal year. A fund is defined as a fiscal and accounting entity with a self-balancing set of accounts. There are three catego~EGsof funds: governmental, proprietary, and fiduciary.



1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Governmental Funds - Governmental funds are those through which most governmental functions typically are financed.Governmental fund reporting focuses on the sources, uses and balances of current financial resources. Expendable assetsare assigned to the various governmental funds according to the purposes for which they mayor must be used. Currentliabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets andliabilities is reported as fund balance. The following are the School District's major governmental funds:

General Fund - The general fund is the general operating fund of the School District and is used to account for allfinancial resources except those required to be accounted for in another fund. Included are certain expenditures forvehicles and movable instructional or non-instructional equipment classified in the capital outlay sub-fund.

As required by the New Jersey State Department of Education, the School District includes budgeted capital outlay inthis fund. Accounting principles generally accepted in the United States of America as they pertain to governmentalentities state that general fund resources may be used to directly finance capital outlays for long-lived improvementsas long as the resources in such cases are derived exclusively from unrestricted revenues.

Resources for budgeted capital outlay purposes are normally derived from State of New Jersey aid, district taxes andappropriated fund balance. Expenditures are those which result in the acquisition of or additions to capital assets forland, existing buildings, improvements of grounds, construction of buildings, additions to or remodeling of buildingsand the purchase of built-in equipment.

Special Revenue Fund - The special revenue fund is used to account for and report the proceeds of specificrevenues sources that are restricted or committed to expenditure for specified purposes other than debt service orcapital projects.

Capital Projects Fund - The capital projects fund is used to account and report financial resources that are restricted,committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilitiesand other capital assets, other than those financed by proprietary funds. The financial resources are derived fromNew Jersey Economic Development Authority grants, temporary notes or serial bonds which are specificallyauthorized by the voters as a separate question on the ballot either during the annual election or at a special election.

Debt Service Fund - The debt service fund is used to account for and report financial resources that are restricted,committed, or assigned to expenditure for principal and interest.

Proprietary Funds - Proprietary funds are used to account for the School District's ongoing activities, which are similar tothose in the private sector.

Enterprise Funds - The enterprise funds are used to account for operations that are financed and operated in amanner similar to private business enterprises, where the intent of the School District is that all costs (expenses,including depreciation) of providing goods or services to the students on a continuing basis be financed or recoveredprimarily through user charges; or, where the School District has decided that periodic determination of revenuesearned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, managementcontrol, accountability, or other purposes.

The School District's enterprise funds are:

Food Service Fund - This fund accounts for the financial transactions related to the food service operations of theSchool District.

After School Program Fund - This fund accounts for the financial resources of the School District's extended dayprogram. This program provides before and after school care to students.

Community Education Fund - This fund accounts for the financial activity related to providing adult schoolactivities within the School District.

All proprietary funds are accounted for on a cost of services or "capital maintenance" measurement focus. This means thatall assets and all liabilities, whether current or noncurrent, associated with their activity are included on their balance sheets.Their reported fund equity (net position) is segregated into net investment in capital assets, and unrestricted net, ifapplicable. Proprietary fund type operating statements present increases (revenues) and decreases (expenses) in net totalposition.

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Proprietary Funds (Continued) - Depreciation of all exhaustive fixed assets used by proprietary funds is charged as anexpense against their operations. Accumulated depreciation is reported on proprietary fund balance sheets. Depreciationhas been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows:

EquipmentLight Trucks and VehiclesHeavy Trucks and Vehicles

12 Years4 Years6 Years

Fiduciary Funds - Fiduciary fund reporting focuses on net position and changes in net position. The fiduciary fund categoryis split into two classifications: trust funds and agency funds. Agency funds are used to account for assets held by theSchool District in a trustee capacity or as an agent for individuals, private organizations, other governments, and/or otherfunds (l.e. payroll and student activities). They are custodial in nature (assets equal liabilities) and do not involvemeasurement of results of operations. The School District has five fiduciary funds; an unemployment compensation trustfund, a private purpose scholarship fund, a flexible spending trust fund, a student activity fund, and a payroll fund.

Measurement Focus

Government-wide Financial Statements - The government-wide financial statements are prepared using the economicresources measurement focus. All assets and all liabilities associated with the operation of the School District are includedon the statement of net position.

Fund Financial Statements - All governmental funds are accounted for using a flow of current financial resourcesmeasurement focus. With this measurement focus, only current assets and current liabilities generally are included on thebalance sheet. The statement of revenues, expenditures and changes in fund balances reports on the sources (l.e,revenues and other financing sources) and uses (l.e, expenditures and other financing uses) of current financial resources.This approach differs from the manner in which the governmental activities of the government-wide financial statements areprepared. Governmental fund financial statements, therefore, include a reconciliation with brief explanations to betteridentify the relationship between the government-wide statements and the statements for governmental funds.

Like the government-wide statements, all proprietary fund types are accounted for on a flow of economic resourcesmeasurement focus. All assets and all liabilities associated with the operation of these funds are included on the statementof net position. The statement of changes in fund net position presents increases (Le. revenues) and decreases (Le.expenses) in net total position. The statement of cash flows provides information about how the School District finances andmeets the cash flow needs of its proprietary activities. Fiduciary funds are reported using the economic resourcesmeasurement focus.

Basis of Accounting

Basis of accounting determines when transactions are recorded in the financial records and reported on the financialstatements. Government-wide financial statements are prepared using the accrual basis of accounting. Governmentalfunds use the modified accrual basis of accounting. Proprietary and fiduciary funds also use the accrual basis ofaccounting. Differences in the accrual and the modified accrual basis of accounting arise in the recognition of revenue, therecording of unearned revenue, and in the presentation of expenses versus expenditures.

Revenues - Exchange and Non-exchange Transactions - Revenue resulting from exchange transactions, in whicheach party gives and receives essentially equal value is recorded on the accrual basis when the exchange takes place.On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and becomeavailable. "Measurable" means the amount of the transaction can be determined and "available" means that theresources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be usedto pay liabilities of the current fiscal year. For the School District, available means expected to be received within sixtydays after fiscal year end.

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Revenues - Exchange and Non-exchange Transactions - Non-exchange transactions, in which the School Districtreceives value without directly giving equal value in return, include Ad Valorem (property) taxes, grants, entitlements, anddonations. Ad Valorem (Property) Taxes are susceptible to accrual, as under New Jersey State Statute, a municipality isrequired to remit to its school district the entire balance of taxes in the amount voted upon or certified, prior to the end ofthe school year. The School District records the entire approved tax levy as revenue (accrued) at the start of the fiscalyear since the revenue is both measurable and available. The School District is entitled to receive monies under theestablished payment schedule and the unpaid amount is considered to be an "accounts receivable". With the exceptionof restricted formula aids recorded in the special revenue fund, revenue from grants, entitlements, and donations isrecognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timingrequirements, which specify the fiscal year when the resources are required to be used or the fiscal year when use is firstpermitted, matching requirements, in which the School District must provide local resources to be used for a specifiedpurpose, and expenditure requirements, in which the resources are provided to the School District on a reimbursementbasis.

Under the modified accrual basis, the following revenue sources are considered to be both measurable and available atfiscal year-end; tuition, grants, fees, and rentals.

Expenses/Expenditures - On the accrual basis of accounting, expenses are recognized at the time they are incurred.The fair value of donated commodities used during the fiscal year is reported in the operating statement as an expense.Unused donated commodities are reported as unearned revenue. The measurement focus of governmental fundaccounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generallyrecognized in the accounting period in which the related fund liability is incurred, if measurable. Allocations of cost, suchas depreciation and amortization, are not recognized in governmental funds.

Budgets/Budgetary Control - Annual appropriated budgets are prepared in the spring of each fiscal year for the general,special revenue, and debt service funds. The budgets are submitted to the county office and are voted upon at the annualschool election on the third Tuesday in April. Budgets are prepared using the modified accrual basis of accounting. Thelegal level of budgetary control is established at line item accounts within each fund. Line item accounts are defined as thelowest (most specific) level of detail as established pursuant to the minimum chart of accounts referenced in N.JAC. 6:23A-16.2(f)1. Transfers of appropriations may be made by School Board resolution at any time during the fiscal year inaccordance with N.JAC. 6A:23A-13.3.

Formal budgetary integration into the accounting system is employed as a management control device during the fiscalyear. For governmental funds there are no substantial differences between the budgetary basis of accounting andaccounting principles generally accepted in the United States of America with the exception of the legally mandated revenuerecognition of the one or more June state aid payments for budgetary purposes only and the special revenue fund.Encumbrance accounting is also employed as an extension of formal budgetary integration in the governmental fund types.Unencumbered appropriations lapse at fiscal year end.

The accounting records of the special revenue fund are maintained on the budgetary basis. The budgetary basis differsfrom GAAP in that the budgetary basis recognizes encumbrances as expenditures and also recognizes the relatedrevenues, whereas the GAAP basis does not. Sufficient supplemental records are maintained to allow for the presentationof GAAP basis financial reports.

The budget, as detailed on Exhibit C-1, Exhibit C-2 and Exhibit 1-3,includes all amendments to the adopted budget, if any.

Exhibit C-3 presents a reconciliation of the general fund revenues and special revenue fund revenues and expendituresfrom the budgetary basis of accounting as presented in the general fund budgetary comparison schedule and the specialrevenue fund budgetary comparison schedule to the GAAP basis of accounting as presented in the statement of revenues,expenditures and changes in fund balances - governmental funds. Note that the School District does not reportencumbrances outstanding at year end as expenditures in the general fund since the general fund budget follows modifiedaccrual basis with the exception of the revenue recognition policy for the one or more June state aid payments.

Encumbrances - Under encumbrance accounting purchase orders, contracts and other commitments for the expenditure ofresources are recorded to reserve a portion of the applicable appropriation. Encumbrances are a component of fundbalance at fiscal year-end as they do not constitute expenditures or liabilities but rather commitments related to unperformedcontracts for goods and services. Open encumbrances in governmental funds, other than the special revenue fund, whichhave not been previously restricted, committed, or assigned, should be included within committed or assigned fund balance,as appropriate.

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Encumbrances - Open Encumbrances in the special revenue fund, however, for which the School District has receivedadvances of grant awards, and all eligibility and time requirements satisfied are reflected on the balance shee as unearnedgrant revenue at fiscal year end.

The encumbered appropriation authority carries over into the next fiscal year. An entry will be made at the beginning of thenext fiscal year to increase the appropriation reflected in the certified budget by the outstanding encumbrance amount as ofthe current fiscal year end.

Cash, Cash Equivalents and Investments - Cash and cash equivalents, for all funds, include petty cash, change funds,cash in banks and all highly liquid investments with a maturity of three months or less at the time of purchase and are statedat cost plus accrued interest. Such is the definition of cash and cash equivalents used in the statement of cash flows for theproprietary funds. U.S. Treasury and agency obligations and certificates of deposit with maturities of one year or less whenpurchased are stated at cost. All other investments are stated at fair value.

New Jersey school districts are limited as to the types of investments and types of financial institutions they may invest in.N.J.S.A. 18A:20-37 provides a list of permissible investments that may be purchased by New Jersey school districts.

N.J.S.A. 17:9-41 et seq. establishes the requirements for the security of deposits of governmental units. The statute requiresthat no governmental unit shall deposit public funds in a public depository unless such funds are secured in accordance withthe Governmental Unit Deposit Protection Act (GUDPA), a multiple financial institution collateral pool, which was enacted in1970 to protect governmental units from a loss of funds on deposit with a failed banking institution in New Jersey. Publicdepositories include State or federally chartered banks, savings banks or associations located in or having a branch office inthe State of New Jersey, the deposits of which are federally insured. All public depositories must pledge collateral, having amarket value at least equal to five percent of the average daily balance of collected public funds, to secure the deposits ofGovernmental Units. If a public depository fails, the collateral it has pledged, plus the collateral of all other publicdepositories, is available to pay the full amount of their deposits to the governmental units.

Tuition Receivable - Tuition charges were established by the School District based on estimated costs. The charges aresubject to adjustment when the final costs are determined.

Tuition Payable - Tuition charges for the fiscal years ended June 30, 2014 and 2013 were based on rates established bythe receiving school district. These rates are subject to change when the actual costs have been determined.

Inventories - Inventories are valued at cost, which approximates market. The costs are determined on a first-in, first-outbasis.

The cost of inventories in governmental fund types is recorded as expenditures when purchased rather than whenconsumed, and is not recorded since any amounts are considered immaterial to the basic financial statements.

Inventories recorded in the government-wide financial statements and in the proprietary fund types are recorded asexpenditures when consumed rather than when purchased.

Prepaid Expenses - Prepaid expenses recorded on the government-wide financial statements and in the proprietary fundtypes represent payments made to vendors for services that will benefit periods beyond June 30, 2014.

In the governmental fund types, however, payments for prepaid items are fully recognized as an expenditure in the fiscalyear of payment. No asset for the prepayment is created, and no expenditure allocation to future accounting periods isrequired (non-allocation method). This is consistent with the basic governmental concept that only expendable financialresources are reported by a specific fund.

Short-Term Interfund Receivables I Payables - Short-term interfund receivables / payables represent amounts that areowed, other than charges for goods or services rendered to / from a particular fund in the School District and that are duewithin one year. These amounts are eliminated in the governmental and business-type columns of the statement of netposition, except for the net residual amounts due between governmental and business-type activities, which are presentedas internal balances.

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Capital Assets - General capital assets are those assets not specifically related to activities reported in the proprietaryfunds. These assets generally result from expenditures in the governmental funds. These assets are reported in thegovernmental activities column of the government-wide statement of net position but are not reported in the fund financialstatements. Capital assets utilized by the proprietary funds are reported both in the business-type activities column of thegovernment-wide statement of net position and the proprietary fund statement of net position ..

All capital assets are capitalized at cost (or estimated historical cost) and updated for additions and retirements during thefiscal year. Donated fixed assets are recorded at their fair market value as of the date received. The School Districtmaintains a capitalization threshold of $2,000. The School District does not possess any infrastructure. Improvements arecapitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend anasset's life are not. All reported capital assets except land and construction in progress are depreciated. Improvements aredepreciated over the remaining useful lives of the related capital assets.

Depreciation is computed using the straight-line method over the following useful lives:

.Description

GovernmentalActivities

Estimated Lives

Business-TypeActivities

Estimated Lives

Land and ImprovementsBuildings and ImprovementsFurniture and EquipmentVehicles

10-20 years10-50 years5-20 years5-10 years

N/AN/A

12 years4-6 years

Accrued Salaries and Wages - Certain School District employees, who provide services to the School District over the ten-month academic year, have the option to have their salaries evenly disbursed during the twelve-month year. New Jerseystatutes require that these earned but undisbursed amounts be retained in a separate bank account. As of June 30, 2014,the amounts earned by these employees were disbursed to the employees' own individual credit union accounts.

Compensated Absences - Compensated absences are those absences for which employees will be paid, such asvacation, sick leave, and sabbatical leave. A liability for compensated absences that are attributable to services alreadyrendered, and that are not contingent on a specific event that is outside the control of the School District and its employees,is accrued as the employees earn the rights to the benefits. Compensated absences that relate to future services, or thatare contingent on a specific event that is outside the control of the School District and its employees, are accounted for inthe period in which such services are rendered or in which such events take place.

The entire compensated absence liability is reported on the government-wide financial statements.

For governmental funds, the current portion of unpaid compensated absences is the amount that is normally expected to bepaid with expendable available financial resources. In proprietary funds, the entire amount of compensated absences isrecorded as a fund liability.

Unearned Revenue - Unearned revenue arises when assets are recognized before revenue recognition criteria have beensatisfied and are recorded as a liability until the revenue is both measurable and the School District is eligible to realize therevenue.

Accrued Liabilities and Long-Term Obligations - All payables, accrued liabilities, and long-term obligations are reportedon the government-wide financial statements, and all payables, accrued liabilities and long-term obligations payable fromproprietary funds are reported on the proprietary fund financial statements. In general, governmental fund payables andaccrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported asobligations of the funds. However, claims and judgments, compensated absences, special termination benefits andcontractually required pension contributions that will be paid from governmental funds are reported as a liability in the fundfinancial statements only to the extent that they are normally expected to be paid with expendable available financialresources. Bonds are recognized as a liability on the fund financial statements when due.

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Net Position - Net position represents the difference between the summation of assets and deferred outflows of resources,and the summation of liabilities and deferred inflows of resources. Net position is classified into the following threecomponents:

Net investment in capital assets - This component represents capital assets, net of accumulated depreciation, net ofoutstanding balances of borrowings used for the acquisition, construction, or improvement of those assets.

Restricted - Net position is reported as restricted when there are limitations imposed on their use either through theenabling legislation adopted by the School District or through external restrictions imposed by creditors, grantors or law orregulations of other governments.

Unrestricted - Net position is reported as unrestricted when it does not meet the criteria of the other two components of netposition.

Fund Balance - The School District reports fund balance in classifications that comprise a hierarchy based primarily on theextent to which the School District is bound to honor constraints on the specific purposes for which amounts in those fundscan be spent. The School District's classifications, and policies for determining such classifications, are as follows:

Nonspendable - The nonspendable fund balance classification includes amounts that cannot be spent because theyare either not in spendable form or are legally or contractually required to be maintained intact. The "not in spendableform" criteria includes items that are not expected to be converted to cash, such as inventories and prepaid amounts.The School District had no nonspendable fund balance at June 30, 2014.

Restricted - This fund balance classification includes amounts that are restricted to specific purposes. Suchrestrictions, or constraints, are placed on the use of resources either by being (a) externally imposed by creditors,grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutionalprovisions or enabling legislation.

Committed - This fund balance classification includes amounts that can only be used for specific purposes pursuantto constraints imposed by formal action of the School District's highest level of decision making authority, which for theSchool District is the Board of Education. Once committed, amounts cannot be used for any other purpose unless theBoard of Education removes, or changes, the specified use by taking the same type of action imposing thecommitment.

Assigned - This fund balance classification includes amounts that are constrained by the School District's intent to beused for specific purposes, but are neither restricted nor committed. Intent is expressed by either the Board ofEducation or by the Business Administrator, to which the Board of Education has delegated the authority to assignamounts to be used for specific purposes.

Unassigned - This fund balance classification is the residual classification for the General Fund. It represents fundbalance that has not been assigned to other funds and that has not been restricted, committed, or assigned to specificpurposes within the general fund. The general fund is the only fund that reports a positive unassigned fund balanceamount. In other governmental funds, if expenditures incurred for specific purposes exceed the amounts restricted,committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance.

When an expenditure is incurred for purposes for which both restricted and unrestricted fund balances are available, it is theSchool District's policy to spend restricted fund balances first. Likewise, when an expenditure is incurred for purposes forwhich amounts in any of the unrestricted fund balance classifications can be used, it is the policy of the School District tospend fund balances, if appropriate, in the following order: committed, assigned, then unassigned.

Operating and Non-Operating Revenues and Expenses - Operating revenues are those revenues that are generateddirectly from the primary activity of the proprietary funds. For the School District, these revenues are sales for the foodservice program and maintenance service fees for the internal service fund. Non-operating revenues principally consist ofinterest income earned on various interest bearing accounts and federal and state subsidy reimbursements for the foodservice program.

Operating expenses are necessary costs incurred to provide the goods or services that are the primary activity of the fund.There are no non-operating expenses.

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Interfunds - Interfund receivables and payables that arise from transactions between funds are recorded by all fundsaffected by such transactions in the period in which the transaction is executed.

Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in theUnited State of America requires management to make estimates and assumptions that affect the amounts reported in thefinancial statements and accompanying notes. Actual results may differ from those estimates.

Recently Issued Accounting Pronouncements - In June 2012, the Governmental Accounting Standards Board (GASB)issued Statement No. 67, "Financial Reporting for Pension Plans - an amendment of GASB Statement 25", which revisesexisting standards of financial reporting for most pension plans. This Statement which is effective for periods beginning afterJune 15, 2013, will not have any effect on the District's financial statements.

In June 2012 the GASB issued Statement No. 68, "Accounting and Financial Reporting for Pensions - an amendment ofGASB Statement No. 27". The primary objective of this Statement is to improve accounting and financial reporting by stateand local governments for pensions. It also improves information provided by state and local governmental employersabout financial support for pensions that is provided by other entities. This Statement results from a comprehensive reviewof the effectiveness of existing standards of accounting and financial reporting for pensions with regard to providingdecision-useful information, supporting assessments of accountability and interperiod equity, and creating additionaltransparency. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and LocalGovernmental Employers, as well as the requirements of Statement No. 50, Pension Disclosures, as they relate to pensionsthat are provided through penslon plans administered as trusts or equivalent arrangements (hereafter jointly referred to astrusts) that meet certain criteria. The requirements of Statements 27 and 50 remain applicable for pensions that are notcovered by the scope of this Statement. This Statement which is effective for periods beginning after June 15, 2014, willhave a significant impact on the District's financial statements.

In January 2013, the GASB issued Statement 69, "Government Combinations and Disposals of Government Operations".This statement establishes accounting and financial reporting standards related to government combinations and disposalsof government operations. This Statement which is effective for periods beginning after December 15, 2013, will not haveany effect on the District's financial statements.

In April 2013, the GASB issued Statement No. 70, "Accounting and Financial Reporting for Nonexchange FinancialGuarantees" This Statement which is effective for periods beginning after June 15, 2013, will not have any effect on theDistrict's financial statements.

In November 2013, the GASB issued Statement No. 71, "Pension Transition for Contributions made Subsequent to theMeasurement Date - an amendment of GASB Statement No. 68". This Statement is required to be applied in conjunctionwith the provisions of GASB Statement No. 68 and is effective for periods beginning after June 15, 2014. The provisions ofthis statement will have a significant impact on the District's financial statements.

2. CASH AND CASH EQUIVALENTS

Custodial Credit Risk Related to Deposits - Custodial credit risk refers to the risk that, in the event of a bank failure, theSchool District's deposits might not be recovered. Although the School District does not have a formal policy regardingcustodial credit risk, N.J.S.A. 17:9-41et seq. requires that governmental units shall deposit public funds in publicdepositories protected from loss under the provisions of the Governmental Unit Deposit Protection Unit (GUDPA). Underthe Act, the first $250,000 of governmental deposits in each insured depository is protected by the Federal DepositInsurance Corporation (FDIC). Public funds owned by the School district in excess of FDIC insured amounts are protectedby GUDPA. However, GUDPA does not protect intermingled trust funds such as salary withholdings of funds that pass tothe School District relative to the happening of a future condition. Such funds are classified as uninsured anduncollateralized. Of the School District's amount on deposit of $1,954,627 as of June 30, 2014, $253,115 was insured underFDIC and the remaining balance of $1,701,512 was collateralized under GUDPA.

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3. CAPITAL RESERVE ACCOUNT

A capital reserve account was established by the School District for the accumulation of funds for use as capital outlayexpenditures in subsequent fiscal years. The capital reserve account is maintained in the general fund and its activity isincluded in the general fund annual budget.

Funds placed in the capital reserve account are restricted to capital projects in the School District's approved Long RangeFacilities Plan (LRFP). Upon submission of the LRFP to the New Jersey Department of Education, a school district mayincrease the balance in the capital reserve by appropriating funds in the annual general fund budget certified for taxes or bytransfer by board resolution at fiscal year-end (June 1 to June 30) of any unanticipated revenue or unexpended line-itemappropriation amounts, or both. A school district may also appropriate additional amounts when the express approval of thevoters has been obtained either by a separate proposal at budget time or by a special question at one of the four specialelections authorized pursuant to N.J.S.A. 19:60-2. Pursuant to N.J.A.C. 6:23A-14.1 (g), the balance in the account cannot atany time exceed the local support costs of uncompleted capital projects in its approved LRFP.

The activity of the capital reserve for the July 1, 2013 to June 30, 2014 fiscal year is as follows:

Balance July 1, 2013Increased by:

Interest EarnedBoard Resolution

$ 115,113

$ 115

115115,228

Decreased by:Budget Withdrawal

Balance June 30, 2014 $ 115,228

The June 30, 2014 capital reserve balance does not exceed the LRFP balance of local support costs of uncompletedprojects.

4. ACCOUNTS RECEIVABLES

Accounts receivables at June 30, 2014 consisted of accounts (fees) and intergovernmental grants. All intergovernmentalreceivables are considered collectible in full due to the stable condition of State programs and the current fiscal yearguarantee of federal funds.

Accounts receivable at June 30, 2014 for the School District's individual major and fiduciary funds, in the aggregate, are asfollows:

Special Capital DebtGeneral Revenue Projects Service Proprietary

Fund Fund Fund Fund Fund TotalIntergovernmental

District Tax Levy $ 67,670 $ 1,163,570 $ 1,231,240State 141,197 $ 63,390 $ 452 205,039Federal $ 164,774 8,286 173,060Other 123,637 7,039 130,676

Total $ 332,504 $ 164,774 $ 63,390 $ 1,163,570 $ 15,777 $ 1,740,015

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5. CAPITAL ASSETS

Capital asset activity for the fiscal year ended June 30,2014, was as follows:

Balance BalanceJune 30, 2013 Additions Deletions June 30, 2014

Governmental Activities:Land $ 764,000 $ 764,000Construction in ProgressTotal Capital Assets not being

Depreciated 764,000 764,000

Capital Assets, being Depreciated:Land Improvements 1,432,386 $ 118,231 1,550,617Building and Improvements 26,623,257 26,623,257Equipment 1,643,283 91,400 1,734,683Total Historical Cost 29,698,926 209,631 29,908,557Less Accumulated Depreciation:

Land Improvements (775,904) (57,235) (833,139)Building and Improvements (7,708,883) (535,198) (8,244,081 )Equipment (1,045,385) (93,384) (1,138,769)

Total Accumulated Depreciation (9,530,172) (685,817) (1G,215,989l

Total Capital Assets, beingdepreciated, net 19,832,567 (476,186) 19,692,568

Governmental Activities CapitalAssets, Net $ 20,596,567 $ (476,186) $ $ 20,456,568

Business-Type Activities:

Equipment $ 195,636 $ 195,636Less - Accumulated Depreciation (171,748) $ (5,340) (177,088)Business-Type Activities Capital

Assets, Net $ 23,888 $ (5,340) $ $ 18,548

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5. CAPITAL ASSETS (Continued)

Depreciation expense in the amount of $685,817 was charged to governmental functions as follows:

Function Amount

Regular InstructionGeneral AdministrationPlant Operations and MaintenanceTransportationUnallocated

$ 23,37121,62815,794

280624744

Total depreciation expense $ 685,817

6. INVENTORY

Inventory in the food service fund at June 30, 2014 consisted of the following:

FoodSupplies

$ 7,1543,625

$ 10,779

7. LONG-TERM OBLIGATIONS

During the fiscal year ended June 30, 2014, the following changes occurred in long-term obligations:

Principal PrincipalOutstanding Outstanding Due Within

June 30, 2013 Additions Reductions June 301 2014 One YearGovernmental Activities:

Compensated Absences $ 1,044,732 $ 66,000 $ 182,982 $ 927,750Obligations under Capital

Leases 242,869 58,531 184,338General Obligation Bonds 9,640,000 970,000 8,670,000 $ 750,000

$ 10.927.601 $ 66,000 $ 1,211,513 $ 9z7821088 $ 7501°°0

Bonds Payable - Bonds and loans are authorized in accordance with State law by the voters of the School Districtthrough referendums. All bonds are retired in serial installments within the statutory period of usefulness. Bonds issuedby the School District are as follows:

2012 Refunding 2004 Bonds dated January 15, 2012 in the amount of $8,670,000 due in annual installmentsthrough January 15, 2025, bearing interest rate of 2.00% to 4.00%.

46



7. LONG-TERM OBLIGATIONS (Continued)

As of June 30, 2014, principal and interest due on bonds outstanding is as follows:

Fiscal YearEnding June 30, Principal Interest

2015 $ 750,000 $ 256,0002016 770,000 241,0002017 755,000 225,6002018 740,000 210,5002019 775,000 195,7002020-2024 3,980,000 648,7002025 900,000 36,000

$ 8,670,000 $ 1,813,500

As of June 30, 2014 the School District had no authorizations to issue additional bonded debt.

Total

$ 1,006,0001,011,000

980,600950,500970,700

4,628,700936,000

$ 10,483,500

Compensated Absences - Compensated absences will be paid from the fund from which the employees' salaries arepaid.

Capital Leases Payable - The School District has entered into the following capital lease agreement:

High Efficiency Boilers Oct. 7, 2016 2.450% $ 295,177

The following is a schedule of the future minimum lease payments under this capital lease, and the present value of thenet minimum lease payments at June 30, 2014:

Fiscal YearEnding June 30, Principal Interest Total

2015 $ 59,965 $ 4,516 $ 64,4812016 61,434 3,047 64,4812017 62,939 1,542 64,481

$ 184,338 $ 9,105 $ 193,443

47



8. OPERATING LEASES

At June 30, 2014, the School District had operating lease agreements in effect for copy machines and chrombooks. Totalrental payments for such leases were $66,874 for the fiscal year ended June 30, 2014. The future minimum leasepayments for these leases are as follows:

Fiscal YearEnding June 30, Amount

20152016

$ 66,87161,212

$ 128,083

9. PENSION PLANS

Teachers' Pension and Annuity Fund (TPAF)

The Teachers' Pension and Annuity Fund is a cost-sharing contributory defined benefit pension plan which was establishedon January 1, 1955, under the provisions of N.J.S.A. 18A:66. The TPAF provides retirement, death and disability, andmedical benefits to qualified members. Vesting and benefit provisions are established by N.J.S.A. 18A:66.

The contribution requirements of plan members are determined by State statute. In accordance with Chapters 113, 114,115, P.L. 1997, plan members enrolled in the TPAF were required to contribute 5% of their annual covered salary.Effective July 1,2007, however, in accordance with Chapter 92 and Chapter 103, P.L. 2007, plan members were required tocontribute 5.5% of their annual covered salary. For employees who were enrolled in the retirement system prior to July 1,2007, the increase was effective with the payroll period that began immediately after July 1,2007. Pursuant to the provisionsof Chapter 78, P.L. 2011, the active member contribution rate was increased to 6.5%. An additional 1.0% increase will bephased-in over seven years beginning on July 1, 2012. The State Treasurer has the right under current law to maketemporary reductions in member rates based on the existence of surplus pension assets in the retirement system; however,statute also requires the return to the normal rate when such surplus pension assets no longer exist.

Under current statute, all employer contributions are made by the State of New Jersey on-behalf of the School District andall other related non-contributing employers. No normal or accrued liability contribution by the School District has beenrequired over the several preceding fiscal years.

Public Employees' Retirement System (PERS)

The Public Employees' Retirement System is a cost-sharing multiple-employer defined benefit pension plan which wasestablished on January 1, 1955. The PERS provides retirement, death and disability, and medical benefits to certainqualified members. Vesting and benefit provisions are established by N.J.S.A. 43:15A and 43:38.

The contribution requirements of plan members are determined by State statute. In accordance with Chapter 62, P.L. 1994,plan members enrolled in the Public Employees' Retirement System were required to contribute 5% of their annual coveredsalary. Effective July 1, 2008, however, in accordance with Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007, planmembers are required to contribute 5.5% of their annual covered salary. For employees enrolled in the retirement systemprior to July 1, 2008, the increase is effective with the payroll period that begins immediately after July 1, 2008. Pursuant tothe provisions of Chapter 78, P.L. 2011, effective October 1, 2011, the active member contribution rate was increased to6.5%. An additional 1.0% increase will be phased-in over seven years beginning on July 1, 2012. The State Treasurer hasthe right under the current law to make temporary reductions in rates based on the existence of surplus pension assets inthe retirement system; however, statute also requires the return to the normal rate when such surplus pension assets nolonger exist.

48



9. PENSION PLANS (Continued)

Public Employees' Retirement System - The School District is billed annually for its normal contribution plus any accruedliability. The School District's contributions, equal to the required contribution for each fiscal year, were as follows:

TotalNon Liability

Fiscal Normal Accrued Contributory Paid byYear Contributions Liability Life District

2014 $ 42,277 $ 185,875 $ 3,880 $ 232,0322013 66,151 158,169 13,351 237,6712012 76,932 153,696 14,707 245,335

Defined Contribution Retirement Program (DCRP)

The Defined Contribution Retirement Program is a cost-sharing multiple-employer defined contribution pension plan whichwas established on July 1, 2007, under the provisions of Chapter 92, P.L. 2007 and Chapter 103, P.L. 2007(N.J.S.A.43:15C-1 et. seq), and expanded under the provisions of Chapter 89, P.L. 2008 and Chapter 1, P.L. 2010. TheDefined Contribution Retirement Program Board oversees the DCRP, which is administered for the Divisions of Pensionsand Benefits by Prudential Financial. The DCRP provides eligible members, and their beneficiaries, with a tax-sheltered,defined contribution retirement benefit, along with life insurance and disability coverage. Vesting and benefit provisions areestablished by N.J.SA 43:15C-1 et. seq.

The contribution requirements of plan members are determined by State statute. In accordance with Chapter 92, P.L. 2007and Chapter 103, P.L. 2007, plan members are required to contribute 5.5% of their annual covered salary. In addition to theemployee contributions, the School District's contribution amounts for each pay period are transmitted to PrudentialFinancial not later than the fifth business day after the date on which the employee is paid for that pay period.

The School District's contributions, equal to the required contribution for each fiscal year, were as follows:

Paid byFiscal Total SchoolYear Liability District

2014 $ 12,454 $ 12,4542013 6,249 6,2492012 5,084 5,084

Related Party Investments - The Division of Pensions and Benefits does not invest in securities issued by the SchoolDistrict.

10. POST-RETIREMENT BENEFITS

The School District contributes to the New Jersey State Health Benefits Program (SHBP), a cost-sharing multiple-employerdefined benefit post-employment healthcare plan administered by the State of New Jersey Division of Pension and Benefits.SHBP was established to provide medical, prescription drug, mental health/substance abuse and Medicare Part Breimbursement to retirees and their covered dependents. The State Health Benefits Program Act is found in New JerseyStatutes Annotated, Title 52, Article 17.25 et seq. Rules governing the operation and administration of the program arefound in Title 17, Chapter 9 of the New Jersey Administrative Code. The State of New Jersey Division of Pension issues apublicly available financial report that includes financial statements and required supplementary information for SHBP. Thatreport may be obtained by writing to the Division of Pension and Benefits, PO Box 295, Trenton, NJ 08625-0295.

49



10. POST-RETIREMENT BENEFITS (Continued)

P.L. 1987, c. 384 and P.L. 1990, c.6 required Teachers' Pensions and Annuity Fund (TPAF) and the Public Employees'Retirement System (PERS), respectively, to fund post-retirement medical benefits for those state employees who retire afteraccumulating 25 years of credited service or on a disability retirement. P.L. 2007, c.1 03 amended the law to eliminate thefunding of post-retirement medical benefits through the TPAF and PERS. It created separate funds outside of the pensionplans for the funding and payment of post-retirement medical benefits for retired state employees and retired educationalemployees. As of June 30, 2013, there were 100,134 retirees receiving post-retirement medical benefits, and the Statecontributed $1.07 billion on their behalf. The cost of these benefits is funded through contributions by the State inaccordance with P.L. 1994, c.62. Funding of post-retirement medical benefits changed from a pre-funding basis to a pay-as-you-go basis beginning in Fiscal Year 1994.

The State is also responsible for the cost attributable to P.L. 1992, c.126, which provides employer paid health benefits tomembers of PERS and the Alternate Benefit Program who retired from a board of education or county college with 25 yearsof service. The State paid $173.8 million toward Chapter 126 benefits for 17,356 eligible retired members in Fiscal Year2013.

The State establishes the contribution rate based on the annual required contribution of the employers (ARC), an amountactuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents the level of fundingthat, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities(or funding excess) of the plan over a period not to exceed thirty years. The State's contribution to the SHBP Fund for TPAFretirees' post-retirement benefits on behalf of the School District for the year ended June 30, 2014 was $720,628, whichequaled the required contributions. The State's contribution to the SHBP Fund for PERS retirees' post-retirement benefitson behalf of the School District was not determined or made available by the State of New Jersey.

11. ON-BEHALF PAYMENTS

For the fiscal year ended June 30, 2014, the School District has recognized as revenues and expenditures $439,508of on-behalf payments made by the State of New Jersey for normal retirement costs related to TPAF and $793,292 foremployer's share of social security contributions for TPAF members, as calculated on their base salaries.

12. RISK MANAGEMENT

The School District is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errorsand omissions; employee health and accident claims; and natural disasters.

Property and Liability Insurance - The School District maintains commercial insurance coverage for property, liability,student accident and surety bonds. A complete schedule of insurance coverage can be found in the Statistical Section ofthis Comprehensive Annual Financial Report.

Joint Insurance Pool - The School District is a member of the School Alliance Insurance Fund. Insurance coverage asprovided by the Fund can be found in the Statistical Section of this Comprehensive Annual Financial Report.

Annual contributions to the Fund are determined by the Fund's Board of Trustees. The School District is jointly andpersonally liable for claims insured by the Fund and its members during the period of its membership, including liability forsupplemental assessments, if necessary. The Fund's Board of Trustees may authorize refunds to its members in any fundyear for which contributions exceed the amount necessary to fund all obligations for that year.

The Fund publishes its own financial report which can be obtained at: School Alliance Insurance Fund, c/o PEGAS, 51Everett Drive, Lawrenceville, New Jersey, 08648.

New Jersey Unemployment Compensation Insurance - The School District has elected to fund its New JerseyUnemployment Compensation Insurance under the "Benefit Reimbursement Method". Under this plan, the School District isrequired to reimburse the New Jersey Unemployment Trust Fund for benefits paid to its former employees and charged toits account with the State. The School District is billed quarterly for amounts due to the State.

50



12. RISK MANAGEMENT (Continued)

The following is a summary of School District contributions, employee contributions, reimbursements to the State forbenefits paid and the ending balance of the School District's expendable trust fund for the current and previous two fiscalyears:

Fiscal Interest Employee Amount EndingYear Earned Contributions Reimbursed Balance

2014 $ 636 $ 13,679 $ 21,224 $ 375,1262013 1,234 30,541 16,600 382,0352012 2,151 12,257 22,875 366,860

13. DEFERRED COMPENSATION

The School District offers its employees a choice of various deferred compensation plans created in accordance withInternal Revenue Code Section 403(b). The plans, available to all permanent School District employees, permit participantsto defer a portion of their current salary to future years. Participation in the plans is optional. The deferred compensation isnot available to the participants until termination, retirement, death, or an unforeseeable emergency occurs. The planassets are held in trust for the benefit of the employee and are administered by a third party therefore they are not reflectedon the financial statements of the School District.

14. COMPENSATED ABSENCES

The School District accounts for compensated absences (e.g. unused vacation, sick leave) as directed by GovernmentalAccounting Standards Board Statement No. 16 (GASB 16), "Accounting for Compensated Absences". A liability forcompensated absences attributable to services already rendered and not contingent on a specific event that is outside thecontrol of the employer and employee is accrued as employees earn the rights to the benefits.

School District employees are granted varying amounts of vacation and sick leave in accordance with the School District'spersonnel policy. Upon termination, employees are paid for accrued vacation. The School District's policy permitsemployees to accumulated unused sick leave and carry forward the full amount to subsequent years. Upon retirementemployees shall be paid by the School District for the unused sick leave in accordance with the School District's agreementswith the various employee unions.

The liability for vested compensated absences is recorded within those funds as the benefits accrued to the employees. Asof June 30, 2014, the liability for compensated absences in the governmental activities was $ 927,750.

15. INTERFUND BALANCES AND TRANSFERS

Interfund receivables/payables are recorded to cover temporary cash shortages and/or timing differences in the respectivefunds. There are no interfund balances that are not expected to be repaid by June 30, 2014. The following interfundbalances were recorded on the various balance sheets as of June 30, 2014:

Interfunds InterfundsFund Receivable Pallable

General $ 1,315,701 $ 720,763Special Revenue 137,735Capital Projects 32,713Debt Service 1,145,073Enterprise 95,763Trust 625,000 180

$ 2,036,464 $ 2,036,464

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16. CONTINGENCIES

The School District participates in a number of federal and state programs that are fully or partially funded by grantsreceived from other governmental units. Expenditures financed by grants are subject to audit by the appropriate grantorgovernment. If expenditures are disallowed due to noncompliance with grant program regulations, the School District maybe required to reimburse the grantor government.

At June 30, 2014, significant amounts of grant expenditures have not been audited by the granting agency, but the SchoolDistrict believes that disallowed expenditures discovered in subsequent audits, if any, will not have a material effect on anyof the individual funds or the overall financial position of the School District. Additionally, unearned revenues are recognizedin those funds that have received grant monies in advance of future, reimbursable expenditures.

17. FLEXIBLE BENEFITS PROGRAM

The School District offers its employees a Flexible Benefits Program. The purpose of the program is to provide a taxincentive for plan participants incurring health premium expenses, dependent care expenses and other medical expensesnot covered by other insurance. The School District, who is the plan administrator, has contracted with a third party to actas its agent to furnish reimbursement services. The plan participants redirect a prescribed amount of their gross pay (tax-free) into a reimbursement account and then in-turn submit claims to the third party for repayment. Because of InternalRevenue Service regulations, if at the end of any plan year unexpended funds remain, these funds will be forfeited by theparticipants and returned to the School District.

The following is a summary of School District contributions, employee contributions, reimbursements to the plan participantsfor benefits paid and the ending balance of the School District's fiduciary fund for the current and prior two years.

Fiscal District Employee Amount EndingYear Contributions Contributions Reimbursed Balance

2014 $ 4 $ 13,650 $ 13,674 $ 1,7912013 2 4,142 2,844 1,8112012 1 1,400 890 511

18. DEFICIT UNASSIGNED FUND BALANCE

The School District has a deficit unassigned fund balance of $267,154 in the General Fund as of June 30, 2014 as reportedin the fund statements (modified accrual basis). N.J.SA 18A:22-44.2 provides that in the event a state school aid paymentis not made until the following school budget year, school districts must record the delayed one or more June state aidpayments as revenues, for budget purposes only, in the current school budget year. The statute provides legal authority forschool districts to recognize this revenue in the current budget year. For intergovernmental transactions, GASB StatementNo. 33 requires that recognition (revenue, expenditure, asset, liability) should be in symmetry, i.e., if one governmentrecognizes an asset, the other government recognizes a liability. Since the State is recording the June state aid paymentsin the subsequent fiscal year, the School District cannot recognize the June state aid payment on the GAAP financialstatements until the year the State records the payable. Due to the timing difference of recording the June state aidpayments, the general and special revenue fund balance deficit does not alone indicate that the School District is facingfinancial difficulties.

Pursuant to N.J.SA 1BA:22-44.2 any negative unassigned general fund balance that is reported as a direct result from adelay in the June payments of state aid until the following fiscal year, is not considered in violation of New Jersey statuteand regulation nor in need of corrective action. The School District deficit in the GAAP funds statements of $267,154is equal to or less than the June state aid payment.

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19. DEFICIT UNRESTRICTED NET POSITION

As of June 30, 2014, a deficit of $1,312,237 existed in the Unrestricted Net Position of the Governmental Activities. Areconciliation of Unreserved Fund Balance reported on Exhibit B-1 to Unrestricted Net Position reported on Exhibited A-1 asfollows:

Balances, June 30, 2014:Fund Balance (Deficit)(Exclusive of Capital Projects and Debt Service Funds)UnassignedLiabilies:

Accrued Interest PayableCompensated Absences

Unrestricted Net Position (Deficit)

$ (267,154)

(117,333)(927,750)

$ (1,312,237)

20. FUND BALANCES

RESTRICTED

As stated in Note 1, the restricted fund balance classification includes amounts that are restricted to specific purposes.Such restrictions, or constraints, are placed on the use of resources by either of the following: (a) externally imposed bycreditors, grantors, contributors, or laws or regulations of other governments; or (b) imposed by law through constitutionalprovisions or enabling legislation.

Specific restrictions of the School District's fund balance are summarized as follows:

General Fund:

Excess Surplus -In accordance with N.J.S.A. 18A:7F-7, as amended, the designation of restricted fund balance-excess surplus is the result of a required calculation pursuant to the New Jersey Comprehensive EducationalImprovement and Financing Act of 1996 (CEIFA). New Jersey school districts are required to restrict general fund,fund balance at the fiscal year end of June 30 if they did not appropriate a required minimum amount as budgetedfund balance in their subsequent years' budget. The excess fund balance at June 30, 2014 is $192,856 presentedon the budgetary basis of accounting (Exhibit C-1). Additionally, $112,272 of excess fund balance generatedduring the 2012-2013 fiscal year has been restricted and designated for utilization in the 2014-2015 budget.

Capital Reserve - As of June 30, 2014, the balance in the capital reserve account is $115,228. The entire amountis restricted for future capital outlay expenditures for capital projects in the School District's approved Long RangeFacilities Plan.

ASSIGNED

As stated in Note 1, the assigned fund balance classification includes amounts that are constrained by the School District'sintent to be used for specific purposes, but are neither restricted nor committed. Specific assignments of the SchoolDistrict's fund balance are summarized as follows:

General Fund:

Designated for Subsequent Year's Expenditures - The School District has appropriated and included as ananticipated revenue for the fiscal year ending June 30, 2014, $372,838 of general fund balance.

Debt Service Fund:

Designated for Subsequent Year's Expenditures - The School District has appropriated and included as ananticipated revenue for the fiscal year ending June 30, 2014, $18,497 of general fund balance.

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20. FUND BALANCES (Continued)

UNASSIGNED

As stated in Note 1, the unassigned fund balance classification represents fund balance that has not been restricted,committed, or assigned to specific purposes. The School District's unassigned fund balance is summarized as follows:

General Fund - As of June 30, 2014, the unassigned fund balance of the general fund was a deficit of $267,154. Thedeficit is a result of the delay in the recording of the payment of state aid until the following fiscal year (See Note 18).

Capital Projects Fund - As of June 30, 2014, the unassigned fund balance of the capital projects fund was $30,677.

21. LOAN PAYABLE - STATE SCHOOL AID ANTICIPATION NOTE

N.J.S.A. 18A:22-44.2, states that if a board of education of a school district is notified by the Commissioner of Education thatone or more June state school aid payments will not be made until the following school budget year, and the school districtdemonstrates through a written application to the commissioner the need to borrow and the commissioner approves theapplication, the board may borrow on or before June 30 of the current school budget year but not earlier than June 8 of thecurrent school budget year a sum not exceeding the amount of the delayed state school aid payments, and may executeand deliver promissory notes therefore through private sale or delivery thereof. In accordance with this statute, on June 9,2014, the School District issued a State School Aid Anticipation Note in the amount of $759,357 at an annual interest rate of1.50% with a maturity date of July 9, 2014. The State of New Jersey shall pay on behalf of the School District the requiredinterest due on the Note.

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Required Supplementary Information - Part II

Budgetary Comparison Schedules

C-1AUDUBON SCHOOL DISTRICT

Required Supplementary InformationBudgetary Comparison Schedule

General FundFor the Fiscal Year Ended June 30, 2014

VarianceOriginal Budget Final Final toBudget Transfers Budget Actual Actual

REVENUES:Local sources:

Local Tax Levy $ 10,312,579 $ $ 10,312,579 $ 10,312,579 $Tuition from other LEA's 2,679,181 2,679,181 2,679,181Capital reserve interest 115 115Unrestricted misc. revenues 220,000 220.000 279,198 59,198

Total local sources 13,211,760 13,211,760 13.271,073 59,313

State sources:Categorical special education aid 698,294 698,294 698,294Equalization aid 5,833,566 5,833,566 5,833,566Categorical security aid 129,718 129,718 129,718Adjustment aid 530,382 530,382 530,382Transportation aid 62,679 62,679 62,679School choice aid 868,344 868,344 868,344Under Adequacy Aid 25,300 25,300 25,300Extraordinary aid 64,042 64,042On-behalfTPAF pension contrib .. (non-budgeted) 439,508 439,508On-behalf TPAF Post Ret.medical (non-budgeted) 720,628 720,628Reimbursed TPAF social security

contribution (non-budgeted) 793,292 793,292

Total state sources 8,148,283 8,148,283 10,165,753 2,017,470

Federal sources:Medicaid Initiative (SEMI) 20.213 20,213 39,082 18,869

Total federal sources 20,213 20,213 39.082 18.869

TOTAL REVENUES 21,380.256 21,380,256 23,475,908 2,095,652

EXPENDITURES:CURRENT EXPENSE:

Regular Programs - Instruction:Salaries of teachers

Kindergarten 251,749 8,472 260,221 260,221Grades 1-5 1,843,413 83,130 1,926,543 1,926,543Grades 6-8 992,293 46,614 1,038,907 1,038,907Grades 9-12 3,492,738 (114,607) 3,378,131 3,378,131

Regular Programs - Home Instruction:Salaries of teachers 45,000 (30,000) 15,000 14,485 515Purchased professional - educational services 20,000 24,793 44,793 44,793

Regular Programs - Undistributed Instruction:Other salaries for instruction 51,220 14,409 65,629 65,629Purchased professional - educational services 35,000 14,292 49,292 49,292Purchased technical services 10,000 (2,680) 7,320 7,177 143Other purchased services 27,700 (22,054) 5,646 5,646General supplies 332,769 (21,691 ) 311,078 305,307 5,771Textbooks 26,625 (17.917) 8,708 7,980 728

Total - Regular Programs - Instruction 7,128,507 (17,239) 7,111,268 7,104,111 7,157

See Management's Discussion and Analysis section of this report for explanation of significant budget variances, original and final.

(CONTINUED TO NEXT PAGE)

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Variance(Continued from prior page) Original Budget Final Final to

Budget Transfers Budget Actual ActualSpecial Education Instruction:

Learning and/or Language Disabilities:Salaries of teachers $ 253,900 $ 4,066 $ 257,966 $ 257,290 $ 676Other salaries for instruction 85,000 10,132 95,132 86,842 8,290General supplies 5874 (520) 5,354 5,354

Total learning and/or language disab. 344.774 13,678 358,452 349,486 8,966

Behavioral Disabilities:Salaries of teachers 85,800 85,800 85,800General supplies 952 (186) 766 766

Total behavioral disabilities 86752 (186) 86,566 86,566

Resource room/resource center:Salaries of teachers 1.159.957 41,600 1,201,557 1,201,314 243Other salaries for instruction 8,300 13,630 21,930 3,145 18,785General supplies 12,500 (3,491) 9,009 9,009Textbooks 2,000 (1,245) 755 755

Total resource room/resource center 1,182,757 50,494 1,233,251 1,214.223 19.028

Preschool Disabilities - Part-Time:Salaries of teachers 77,950 3,564 81,514 81,512 2Other salaries for instruction 40,642 3,808 44,450 40,110 4,340General supplies 1,400 (155) 1245 1,245

Total preschool disabilities - part-time 119,992 7.217 127,209 122,867 4342

Total Special Education - Instruction 1,734,275 71203 1,805,478 1,773,142 32,336

Basic Skills/Remedial - InstructionSalaries of teachers 222,415 83,882 306,297 306,297General supplies 3,000 (829) 2.171 2171

Total basic skills/remedial- instruction 225.415 83,053 308,468 308,468

School-Sponsored Cocurricular Act - Instruction:Salaries of teachers 226,133 24,361 250,494 249,646 848Supplies and materials 57,755 (2,070) 55,685 55,685

Total school-sponsored cocurr. act. - instruct. 283,888 22,291 306,179 305,331 848

School-Sponsored Athletics - Instruction:Salaries of teachers 347,000 (6,732) 340,268 339,366 902Purchased services 36,000 (375) 35,625 35,000 625Supplies and materials 78,876 4,808 83,684 83,374 310Other objects 8000 375 8375 8,375

Total school-sponsored athletics - instruct. 469,876 (1,924) 467,952 466,115 1,837



58



General FundFor the Fiscal Year Ended June 30,2014


Budget Transfers Budget Actual Actual

Community Services Programs/OperationsSalaries $ 42,000 s $ 42.000 $ 40,739 $ 1,261

Total Community Services Programs/Operations 42.000 42,000 40.739 1,261

Total Instruction 9,883,961 157,384 10,041,345 9,997.906 43,439

Undistributed Expenditures - InstructionTuition to other LEAs within the state - spec 60,160 3,785 63,945 63,945Tuition to county vocational school - reg 11,600 (499) 11,101 11,101Tuition to CSSD & regional day school 362,320 53,274 415,594 412,654 2,940Tuition to priv. sch. for the disabled in state 469,392 (77,485) 391,907 389,954 1,953Tuition - State facilities 40,365 40,365 40.365

Total undistributed expenditures - instruction 943,837 (20,925) 922,912 918.019 4,893

Attendance and Social Work Services:Salaries 24,175 24,175 23,675 500

Total 24,175 24.175 23,675 500

Health Services:Salaries 226,300 2,200 228,500 227,895 605Purchased professional and technical services 13,000 425 13,425 13,425Other purchased services 500 (468) 32 32Supplies and materials 7.800 (2,157) 5,643 3,797 1,846

Total health services 247,600 247,600 245,117 2,483

Speech, OT, PT & Related Services;Salaries 353,510 41,605 395,115 395,115Supplies and materials 4,000 (421) 3,579 3,579

Total speech, ot, pt, & related services 357,510 41,184 398,694 398,694

Guidance:Salaries of other professional staff 506,787 (4,734) 502,053 502,053Salaries of secretarial and clerical assistants 64,850 (3,092) 61,758 61,758Purchased professional - educational services 6,000 26,632 32,632 32,632Other purchased services (400-500 series) 14,750 (9,810) 4,940 4,940Supplies and materials 12.250 (5,718) 6,532 6,532

Total guidance 604,637 3,278 607,915 607,915

Child Study Teams:Salaries of other professional staff 442,401 (9,317) 433,084 433,084Salaries of secretarial and clerical assistants 76,650 474 77,124 77,124Purchased professional - educational services 36,500 6,575 43,075 43,075Other purchased prof. and technical services 100,000 (23,354) 76,646 76,646Supplies and materials 2,500 1_.281 3,781 3.781

Total child study teams 658.051 (24,341) 633,710 633,710



59





Budllet Transfers Budget Actual Actual

Improvement of Instruction Services:Salaries of supervisors of instruction $ 65,470 $ 807 $ 66,277 $ 66,277 $Salaries of other professional staff 33,478 33,478 33,477 1Salaries of secretarial and clerical assistants 44,375 (2,102) 42,273 41,529 744Other salaries 20,000 (19,870) 130 130Purchased professional - educational services 10,000 (3,132) 6,868 6,868Supplies and materials 10,500 (10,153) 347 107 240

Total improvement of instructional services 183,823 (34,450) 149,373 148,258 1,,115

Educational Media Services/School Library:Salaries 100,294 7,001 107,295 107,114 181Purchased professional - technical services 18,000 (935) 17,065 17,065Other purchased services 165 165 165Supplies and materials 15,500 !1,44g) 14.058 13,244 814

Total educational media services/school library 133.794 478g. 138,583 137,588 995

Instructional Staff Training Services:Salaries of supervisors of instruction 96,221 4,736 100,957 100,613 344Salaries of other professional staff 33,478 33,478 33,477 1Purchased professional - educational services 25,000 (4,219) 20,781 20,416 365Other purchased professional technical services 800 800 800Supplies and materials 10,500 (3,933) 6,567 6,567

Total instructional staff training services 165,199 (2,616) 162,583 155,306 7,277

Support Services - General Administration:Salaries 232,813 (41,551) 191,262 164,461 26,801Legal services 25,000 596 25,596 25,596Audit Fees 29,000 29,000 29,000Architectural/Engineering Services 4,000 1,352 5,352 4,922 430Communications / telephone 40,000 6,484 46,484 46,484Other purchased services 48,000 1,390 49,390 49,390Supplies and materials 4,000 (2,724) 1,276 1,276Miscellaneous expenditures 28,000 28,000 24,671 3,329

Total support services - general administration 410,813 (34,453) 376.360 345,800 30,560

Support Services - School Administration:Salaries of principals/assist. principals 628,779 (668) 628,111 628,111Salaries of secretarial and clerical assistants 357,350 5,014 362,364 362,364Other purchased services (400-500 series) 7,000 (4,019) 2,981 2,898 83Supplies and materials 2,500 (488) 2,012 897 1,115Other objects 6,000 161 6,161 6,161

Total support services - school administration 1,001,629 1,001,629 1.000.431 1,198

Central Services:Salaries 310,769 3,205 313,974 313,974Misc. purchased services 78,000 6,044 84,044 84,044Supplies and materials 7,500 1,938 9,438 9,438Interest on current loans 7,500 (983) 6,517 6,517Miscellaneous expenditures 5,500 5,347 10,847 10,847

Total central services 409,269 15,551 424,820 424,820



60





Budget Transfers Budget Actual Actual

Admin Informational Tech.Salaries $ 98,416 $ 12,252 $ 110,668 $ 110,668 $General supplies 8,000 (778) 7,222 6,004 1,218

Total admin informational tech 106,416 11474 117,890 116,672 1,218

Required Maintenance School Facilities:Salaries 292,405 (26,332) 266,073 266,073General supplies 10,000 10,000 10,000

Total required maintenance school facilities 302,405 (26,332) 276,073 276,073

Other Operation & Maintenance of Plant:Salaries 600,854 9,511 610,365 601,776 8,589Other purchased property services 62,000 (9,816) 52,184 52,184Insurance 62,000 2,450 64,450 64,450Misc. Purchased Services 59,000 15,784 74,784 74,784General Supplies 112,000 1,420 113,420 113,420Energy (Electricity) 435,284 (61,527) 373,757 364,292 9,465Other objects 3,000 3,000 3,000Energy (Natural Gas) 125,000 (13,444) 111,556 96,177 15,379

Total other operations & main!. of plant 1,459,138 {55,622) 1,403,516 1,367,083 36,433

Care & Upkeep of Grounds:Salaries 100,900 650 101,550 101,550General Supplies 14,000 (650) 13,350 11,724 1,626

Total care and upkeep of grounds 114,900 114,900 113,274 1,626

Total operation & main!. of plant services 1,876,443 (81,954) 1,794,489 1,756,430 38,059

Student Transportation Services:Salaries for Pupil Trans (other than between

home and school) 48,000 3,102 51,102 51,102Management fee - ESC Transp. programs 8,000 4,203 12,203 12,203Cleaning, repair and maintenance services 14,000 (4,203) 9,797 9,103 694Contr. servo (not between home & sch) - vendor 52,000 (17,527) 34,473 24,804 9,669Contr. Servo (Spl. Ed. Students) - ESC 250,000 (5,575) 244,425 244,425Misc. purchased services - transportation 5,000 5,000 2,172 2,828Supplies and materials 8,000 8,000 7,093 907

Total student transportation services 365,000 (20,000) 365,000 350,902 14,096


(CONTINUED TO NEXT PAGEl

61



General FundFor the Fiscal Year Ended June 30,2014


BUdget Transfers Budget Actual Actual

Unallocated Benefits - Employee Benefits:Social security contributions $ 270,000 $ 35,951 $ 305,951 $ 305,951 $Other retirement contributions - PERS 270,000 (20,000) 250,000 243,685 6,315Workmen's compensation 205,000 205,000 196,437 8,563Health benefits 3,000,922 (70,872) 2,930,050 2,921,757 8,293Tuition reimbursement 40,000 40,000 24,808 15,192Other employee benefits 127,566 (8,996) 118,570 35,541 83,029

Total unallocated benefits - employee benefits 3,913,488 (63,917) 3,849,571 3,728,179 121,392

On-behalf TPAF pension contr, (non-budgeted) 439,508 (439,508)On-behalf TPAF post ret. medical (non-budgeted) 720,628 (720,628)Reimbursed TPAF social security contr, (non-budgeted) 793,292 (793,292)

Total Undistributed Expenditures 11,421,684 (206,380) 11,215,304 12,944,944 (1,729,640)

Total General Current Expense 21,305,645 (48,996) 21,256,649 22,942,850 (1,686,201 )

CAPITAL OUTLAY:Equipment:

Grades 9-12 48,996 48,996 48,996Undist. expend, - special schools (all programs) 35,000 35,000 30,881 4,119Undist. expend, - custodial services 35,000 (35,000)

Total Equipment 35,000 48,996 83,996 79,877 4,119

Facilities Acquisition and Construction Services:Construction services 320,000 (33,448) 286,552 145,832 140,720Lease purchase agreements - principal 58,000 33,448 91,448 91,448Assessment on SDA Funding 101 451 101,451 101,451

Total Facilities Acquisition and Constr, Services 479,451 479,451 338,731 140,720

Total Capital Outlay 514,451 48,996 563.447 418,608 144,839

Transfer of Funds to Charter School 17,505 17,505 17,505

TOTAL EXPENDITURES 21,837,601 21,837.601 23.361,458 (1,523.857)

Excess (Deficiency) of RevenuesOver (Under) Expenditures: (457,345) (457,345) 114450 571,795

Other Financing Sources:Operating transfers out .(3B,OGlO) (38,000) (38,000)

Total other financing sources (3B,ObOl (38,°00) (38,000)

Excess (Deficiency) of Revenues and OtherFinancing Sources Over (Under) Expendituresand Other Financing Sources (Uses): (495,345) (495,345) 76,450 571,795

Fund Balance - July 1, 2013 1,208,947 1,208,947 1,208,947

Fund Balance - June 30, 2014 $ 713,602 $ $ 713,602 $ 1,285,397 $ 571.795



62

AUDUBON SCHOOL DISTRICTRequired Supplementary Information

Budgetary Comparison ScheduleGeneral Fund


(Continued from prior page) OriginalBudget

BudgetTransfers

Recapitulation of Fund Balance:Restricted Fund Balance:

Capital reserveExcess surplus- designated for subsequent year's budgetExcess surplus

Assigned Fund Balance:Designated for subsequent year's expenditures

Unassigned Fund Balance:

Reconciliation to Governmental Funds Statements (GAAP):Last State Aid Payment not Recognized on GAAP Basis

Fund Balance per Governmental Funds (GAAP)

FinalBudget Actual

$ 115,228112,272192,856

372,838492,203

1,285,397

(759j357}

$ 526,040

C-1

VarianceFinal toActual


63



Special Revenue FundFor the Fiscal Year Ended June 30, 2014


REVENUES:Federal sources $ 711,355 $ $ 711,355 $ 612,950 $ (98,405)

Total Revenues 711,355 711,355 612,950 (98,4052

EXPENDITURES:Instruction:

Salaries of teachers 140,486 (26,021) 114,465 102,880 11,585Other salaries for instruction 176,154 300 176,454 150,479 25,975Purchased professional - tech, services 1,000 1,000 1,000Other purchased services 261,962 261,962 245,200 16,762General supplies 51,456 51,456 43,453 8,003Other objects 3,739 3,739 975 2,764

Total Instruction 634,797 _ (25,721) 609,076 542,987 66,089

Support Services:Other salaries 5,000 5,000 5,000Personal services - employee benefits 4,381 13,800 18,181 16,201 1,980Purchased prof, - technical services 31,403 31,403 21,357 10,046Other purchased services 23,999 6,921 30,920 21,968 8,952General supplies 15,775 15,775 5,287 10,488Other objects 1,000 1,000 150 850

Total Support Services 76,558 25,721 102,279 69,963 32,316

Facilities Acquisition and Construction Services:Buildings

Total Facilities Acq. and Const. Services

Total Expenditures 711,355 711,355 612,950 98,405

Total Outflows 711..355 711,355 612,950 98,405

Excess (Deficiency) of Revenues over(under) Expenditures and other financingsources (uses)


64


Notes to Required Supplementary InformationBudgetary Comparison


Explanation of Differences between Budgetary Inflows and Outflows and GAAPRevenues and Expenditures

SpecialGeneral Revenue

Fund Fund

SourcesJinflows of resourcesActual amounts (budgetary basis) "revenue"

from the budgetary comparison schedules $ 23,475,908 $ 612,950

Difference - budget to GAAP:Grant accounting budgetary basis differs from GAAP in that

encumbrances are recognized as expenditures, and therelated revenue is recognized.

State aid payment recognized for GAAP statements in currentyear, previously recognized for budgetary purposes. 704,176

State aid payment recognized for budgetary purposes, notrecognized for GAAP statements until the subsequent year. (759,357)

Total revenues as reported on the statement of revenues,expenditures, and changes in fund balances - governmental funds. $ 23,420,727 $ 612,950

Uses/outflows of resourcesActual amounts (budgetary basis) "total expenditures" from

the budgetary comparison schedule $ 23,361,458 $ 612,950

Differences - budget to GAAPEncumbrances for supplies and equipment ordered but not

received is reported in the year the order is placed for budgetarypurposes, but in the year the supplies are received for financialreporting purposes.

Total expenditures as reported on the statement of revenues,expenditures, and changes in fund balances - governmental funds $ 23,361,458 m 612,950

65

Other Supplementary Information

Special Revenue Fund

E-1AUDUBON SCHOOL DISTRICT

Special Revenue FundCombining Schedule of Revenues and Expenditures

Budgetary BasisFor the Fiscal Year Ended June 30, 2014

IDEA IDEATiitlel TitlellA IDEA Basic IDEA Preschool

Title I Car!l':0ver Title II A Car!l':0ver Basic Car!l':0ver Preschool Car!l':0ver TotalREVENUES:State sourcesFederal sources $ 168,271 $ 1,157 $ 37,119 $ 3,503 $ 341,321 .$ 47,628 $ 8,253 s 5,698 $ 612,950

Total Revenues 168,271 1,157 37,119 3,503 341,321 47.628 8,253 .5,698 612,950

EXPENDITURES:Instruction:Salaries of teachers 60,000 25,000 14,893 2,987 102,880Other salaries for instruction 77,233 67,462 4,488 1,296 150,479Other purchased services 215,375 24,104 5,721 245,200General supplies 12,126 1,157 28,728 27 1,415 43,453

en Other objects 956 19 97500

Total instruction 149,359 1,157 25,000 312,521 43,504 5,748 5,698 542,987

Support services:Other salaries 5,000 5,000Personal services-employee benefits 11,436 4,765 16,201Purchased prof tech services 1,947 14,286 4,124 1,000 21,357Other purchased services 7,354 3,503 10,289 822 21,968General supplies 379 4,225 683 5,287Other objects 150. 150

Total support services 18,912 12,119 3,503 28,800 4,124 2,505 69,963

Facilities acquisition and const. serv.:Instructional equipment

Total facilities acq. and const. servo

Total Expenditures 168,271 1,157 37,119 3,503 341,321 47,628 8,253 5,698 612,950

Excess (deficiency) of revenues over(under) expenditures and otherfinancing sources (uses)

Capital Projects Fund

F-1

AUDUBON SCHOOL DISTRICTCapital Projects Fund

Summary Statement of Revenues, Expenditures,and Changes In Fund Balance - Budgetary Basis

For the Fiscal Year ended June 30, 2014

Revenues and Other Financing Sources:

Total revenues and other financing sources

Expenditures and Other Financing (Uses):

Total expenditures and other financing (uses)

Excess (deficiency) or revenues over (under) expenditures

Fund Balance - July 1, 2013 $ 30,677

Fund Balance - June 30, 2014 $ 30,677

70

F-1a


Statement of Project Revenues, Expenditures, Project Balance,and Project Status - Budgetary Basis

Renovations to Mansion Avenue SchoolFrom Inception and for the Fiscal Year ended June 30, 2014

Revenues and Other Financing Sources:State sources - SCC GrantBond proceeds

Total revenues

Expenditures and Other Financing Uses:Purchased professional servicesConstruction services

Excess (deficiency) or revenues over(under) expenditures

Additional project information:Project NumberGrant DateBond Authorization DateBonds AuthorizedBonds IssuedOriginal Authorized CostAdditional Authorized CostRevised Authorized Cost

Percentage Increase over OriginalAuthorized Cost

Percentage CompletionOriginal target completion dateRevised target completion date

Prior Periods

$ 1,048,6001,079,795

2,128,395

156,9271,958,617

2,115,544

$ 12,851

0150-050-04-100011/13/0304/01/04

$ 1,283,795$ 1,283,795$ 2,332,395$ (200,000)$ 2,132,395

-8.57%100.00%12/01/0512101106

71

RevisedAuthorized

Current Year Total Costs

$ 1,048,600 $ 1,048,6001,079,795 1,079,795

2,128,395 2,128.395

156,9271,958,617

156,9271,958,617

2,115,544 2,115,544

$ $ $ 12.85112,851

F-1b


Statement of Project Revenues, Expenditures, Project Balance,and Project Status - Budgetary Basis

Renovations to High SchoolFrom Inception and for the Fiscal Year ended June 30, 2014

Revenues and Other Financing Sources:State sources - SCC GrantBond proceedsPrior year payables canceled

Total revenues

Expenditures and Other Financing Uses:SalariesPurchased professional servicesConstruction servicesOther objects

Excess (deficiency) or revenues over(under) expenditures

Additional project information:Project NumberGrant DateBond Authorization DateBonds AuthorizedBonds IssuedOriginal Authorized CostAdditional Authorized CostRevised Authorized Cost

Percentage Increase over OriginalAuthorized Cost

Percentage CompletionOriginal target completion dateRevised target completion date

Prior Periods Total

RevisedAuthorized

CostsCurrent Year

$ 5,681,7408,237,472

46,001

$ 5,681,7408,237,472

46,001

$ 5,681,7408,237,472

46,001

13,965,213 13,965,213 13,965,213

9,601 9,601 9,6011,344,875 1,344,875 1,344,875

12,527,615 12,527,615 12,527,61565,296 65,296 65,296

13,947,387 13,947,387 13,947,387

s 17,826. $ $ 17!826 ~ 17,826

0150-019-04-100011/13/0304/01/04

$ 8,152,924$ 8,152,924$ 13,834,664$ 70,000$ 13,904,664

0.51%99.00%

12101/0512101/07

72

Proprietary Funds

G-1AUDUBON SCHOOL DISTRICT

Enterprise FundsCombining Statement of Net Position

June 30,2014


Fund Program Program TotalASSETS:

Current Assets:Cash and cash equivalents $ $ 67,684 $ 23,919 $ 91,603

Accounts receivable:State 452 452Federal 8,286 8,286Interfund 20,763 75,000 95,763Other 7,039 7,039

Inventories 10,779 10,779

Total Current Assets 47,319 142,684 23,919 213!922

Noncurrent Assets:Equipment 195,636 195,636Less - accumulated depreciation {177,088} {177,088}

Total Noncurrent Assets 18,548 18,548

Total Assets 65,867 142,684 23,919 232,470

LIABILITIES:

Current Liabilities:Cash overdraftUnearned revenue

26,447 26,447128 128

26,575 26!575

18,548 18,54820!744 142,684 23,919 1871347

m 391292 m 142,684 $ 23,919 ~ 205,895

Total Current Liabilities

NET POSITION:Net investment in capital assetsUnrestricted

Total Net Position

74

G-2AUDUBON SCHOOL DISTRICT

Enterprise FundsCombining Statement of Revenues, Expenses

and Changes in Fund Net PositionFor the Fiscal Year Ended June 30,2014


Fund Program Program TotalsOPERATING REVENUES:

Charges for Services:Daily sales reimbursable programs:

School lunch $ 107,375 $ 107,375Daily sales non-reimbursable programs:

Adult and alacarte sales 138,642 138,642Program fees $ 108,971 $ 105,481 214,452

Total Operating Revenues 246,017 108,971 105,481 460,469

OPERATING EXPENSES:Salaries and fringe benefits 227,506 30,845 105,044 363,395Management fee 22,631 22,631Supplies and materials 14,526 661 15,187Other costs 12,709 12,709Depreciation 5,340 5,340Cost of sales 166,251 70,617 236,868

Total Operating Expenses 448,963 101,462 105,705 656,130

Operating Income (Loss) {202,946} 7,509 {224) {195,661)

Non-Operating Revenues:State sources:

State school lunch program 4,128 4,128Federal sources:

National school lunch program 137,014 137,014National school breakfast program 8,284 8,284Food distribution program 24,383 24,383

Local sources:Interest earned 92 92

Total Non-Operating Revenues 173,809 92 173,901

Income (Loss) before Contributions and Transfers (29,137) 7,601 (224) (21,760)

Operating Transfers In 38,000 38,000

Changes in Net Position 8,863 7,601 (224) 16,240Net Position - July 1, 2013 30,429 135,083 24,143 189,655

Net Position - June 30,2014 $ 39,292 $ 142,684 m 23,919 m 205,895

75

G·3AUDUBON SCHOOL DISTRICT

Enterprise FundsCombining Statement of Cash Flows



Fund Program Program Total

Cash Flows from Operating Activities:Cash receipts from customers $ 244,666 $ 108,972 $ 105,481 $ 459,119Cash payments to employees for services (227,506) (30,846) (105,044) (363,396)Cash payments to suppliers for goods

and services (227,079) (70,617) (661) (298,357)

Net cash provided by (used for) operating activities (209,919) 7,509 (224) (202,634)

Cash Flows from Noncapltal Financing Activities:Cash received from state sources 4,104 4,104Cash received from federal sources 167,962 167,962Operating transfer in 38,000 38,000

Net cash provided by noncapital financing activities 210,066 210,066

Cash Flows used by Noncapltal Financing Activities:Cash advance to General Fund (75,000) (75,000)

Cash Flow Provided by Investing Activities:Interest on cash equivalents 92 92

Net increase (decrease) in cash and cash equivalents 147 (67,399) (224) (67,476)

Cash and cash equivalents - July 1, 2013 (26,594} 135!083 24,143 132,632

Cash and cash equivalents- June 30, 2014 $ (26,447) $ 67,684 $ 23,919 $ 65,156

Reconciliation of Operating Income (Loss)to Net Cash provided by (used for)

Operating Activities:Operating income (loss) $ (202,946) $ 7,509 $ (224) $ (195,661)Adjustments to reconcile operating income(loss) to cash provided by (used for)operating activities:

Depreciation 5,340 5,340Change in assets and liabilities:(Increase) decrease in accounts receivables (1,479) (1,479)(Increase) decrease in inventories 406 406Increase (decrease) in unearned revenue 128 128Increase (decrease) in accounts payable (11,368} {11,368}

Net cash provided by (used for) operating activities $ (209,919) $ 7,509 $ (224) $ (202,634)

Noncash Noncapltal Financing Activities:During the year the District received $24,383 of food commodities from theU.S. Department of Agriculture.

76

Fiduciary Funds

H-1AUDUBON SCHOOL DISTRICT

Fiduciary FundsCombining Statement of Fiduciary Net Position

June 30, 2014

Trust Funds Agency FundsUnemploymentCompensation Flexible

Insurance Benefits Scholarship StudentTrust Trust Trust Activity Payroll Totals

ASSETS:

Cash and cash equivalents $ 50,126 $ 1,791 $ 112,723 $ 80,478 $ 5,122 $ 250,240Interfund receivable 325,000 300.000 625,000

...... Total Assets $ 375.126 $ 1.791 $ 112,723 $ 380.478 $ 5,122 $ 875,240<XI

LIABILITIES:

Payroll deductions and withholdings $ 4,942 $ 4,942Interfund payable 180 180Due to student groups $ 380,478 380,478

Total Liabilities $ 380.478 $ 5,122 385,600

NET POSITION:

Held in trust for payment of claims $ 375,126 $ 1,791 376,917Held in trust for scholarships $ 112,723 112.723

Total Net Position $ 375,126 $ 1.791 $ 112,723 $ 489,640

H-2

AUDUBON SCHOOL DISTRICTFiduciary Funds

Combining Statement of Changes In Fiduciary Net PositionFor the Fiscal Year Ended June 30,2014

Flexible UnemploymentBenefits Scholarship Compensation

Trust Trust InsuranceFund Fund Trust Fund Totals

ADDITIONS:

Interest on investments $ 4 $ 114 $ 636 $ 754Donations 7,685 7,685Contributions 13,650 13,679 27,329

Total Additions 13,654 7,799 14,315 35,768

DEDUCTIONS:Claims paid 13,674 21,224 34,898Scholarships paid 11,926 11,926

Total Deductions 13,674 11,926 21,224 46,824

Change in Net Position (20) (4,127) (6,909) (11,056)

Net Position -- July 1, 2013 1 811 116,850 382,035 500,969

Net Position -- June 30, 2014 $ 1?91 ~ 112,723 m 375,126 $ 489,913

79


Fiduciary FundsStudent Activity Agency Fund Schedule of Receipts and Disbursements

for the Fiscal Year ended June 30,2014

Balance Cash Cash BalanceJuly 1, 2013 Receipts Disbursements Transfers June 30,2014

High School $ 113,992 $ 338,689 $ 323,782 $ 4,701 $ 133,600

Haviland Avenue School 10,685 3,569 4,634 1,445 11,065

Mansion Avenue School 11,625 4,107 9,286 913 7,359

Class Accounts 41,509 24,377 19,075 (1,582) 45,229

Field Trips 32,556 27,905 (3,610) 1,041

Miscellaneous 114,782 13,163 46,938 (4,644) 76,363

Interest 303 303

Athletic Reserve 90,494 40,493 29,919 1,808 102,876

Athletic Account 6,930 35,003 39,291 2,642

Total all schools $ 390,017 ~ 492,260 $ 500,830 ~ (969) ~ 380,478

80


Fiduciary FundsPayrol Agency Fund Schedule of Receipts and Disbursements

for the Fiscal Year ended June 30, 2014

Balance BalanceJul~ 1,2013 Additions Deletions June 30,2014

ASSETS:

Cash and cash equivalents $ 3;470 $ 16,835,251 $ 16,833,599 $ 5,122

Total Assets $ 3,4.70 $ 16,835,251 $ 16,833,599 $ 5,122

LIABILITIES:

Net payroll $ $ 8,541,004 $ 8,541,004 $Summer savings 614,137 614,137Interfund payable 1,957 1,777 180Payroll deductions and with holdings 3,470 7,678,153 7,676,681 4,942

Total Liabilities !2 3,470 $ 16,835,251 !2 16,833,599 m 5,122

81

Long-Term Debt Schedules

Date of Amount ofIssue Issue Issue

Refunding bonds of 1994 Issue 10/01/03 $ 2,725,000

Renovations and Improvements 4/01/04 10,460,000to various school buildings

Refunding bonds of 2012 Issue 1/15/12 8,870,000

AUDUBON SCHOOL DISTRICTStatement of Serial Bonds


Annual MaturitiesDate Amount

InterestRate

1/15/15 $ 750,000 2.000%1/15/16 770,000 2.000%1/15/17 755,000 2.000%1/15/18 740,000 2.000%1/15/19 775,000 2.000%1/15/20 730,000 3.000%1/15/21 770,000 3.000%1/15/22 785,000 4.000%1/15/23 815,000 4.000%1/15/24 880,000 4.000%1/15/25 900,000 4.000%

1-1

Balance BalanceJuly 1, 2013 Issued Retired June 30,2014

$ 270,000 $ 270,000 $

650,000 650,000

8,720,000 50,000 8,670,000

$ 9.640,000 $ $ 970,000 $ 8,670,000

Series

High Efficiency Boilers

Dateof

Lease

10/03111

MaturityDate

10/07/16

AUDUBON SCHOOL DISTRICTStatement of Obligations Under Capital Leases


InterestRate

2.45%

Amount of Original IssuePrincipal Interest

$ 295,177 $ 22,406

AmountOutstandingJuly 1, 2013

$ 242,869

Issued

$ 242.869 =$,,=====

1-2

AmountOutstanding

Retired June 30. 2014

$ 58,531 $ 184,338

$ 58,531 s 184,338

1-3AUDUBON SCHOOL DISTRICT

Budgetary Comparison ScheduleDebt Service Fund



REVENUES:Local sources:

Local tax levy $ 1,163,570 $ 1,163,570 $ 1,163,570State sources:

Debt Service Aid Type II 95,510 95,510 95,510

Total Revenues 1,259,080 1,259,080 1,259,080

EXPENDITURES:Regular debt service:

Interest 289,080 289,080 289,080

Redemption of principal 970,000 970,000 970,000

Total regular debt service 1,259,080 1,259,080 1,259,080

Excess (Deficiency) of revenues over(under) expenditures

Other Financing Sources:Operating transfers in

Excess (Deficiency) of Revenues and OtherFinancing Sources Over (Under) Expendituresand Other Financing Sources (Uses)

Fund Balance - July 1, 2013 18,497 18,497 18,497

Fund Balance - June 30, 2014 m 181497 $ $ 18,497 $ 18,497 $

Recapitulation of Excess (Deficiency) orrevenues over (under) expendituresBudgeted Fund Balance $ $ $ $ $

85

Statistical Section

AUduboltSchool DistrictNet Position by Component,Last Ten Fiscal Years(accrual basis of accounting)

J-1

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Governmental activities:Net investment in capital assets $ 10,437,614 $ 11,521,273 $11,930,471 $10,474,736 $ 10,539,513 $ 10,621,108 $ 10,778,212 $ 10,563,764 $ 11,049,665 $ 11,602,230Restricted for.

Capital projects 306,125 53,264 59,162 33,439 135,890 150,809 45,790 45,790 145,790 145,905Debt service 10,175 10,175Other purposes 354,759 226,646 176,349 269,632 265,101 625,184 483,461 837.735 626,114 696.463

Unrestricted (1,149,833) (1,459,678) (1,521,693) (1,406,239) (1,528,614) (1,570,690) (1,336,087) (1,274,859) (1,384,258) (1,312,237)Total governmental activities net position $ 9,948,665 $ 10,341,705 $10,654,484 $ 9,381,743 $ 9,411,890 $ 9,826,411 $ 9,969,396 s 10,172,430 $ 10,427,531 $ 11,132,361.

Business-type activities:Net investment in capital assets $ 50,989 $ 46,567 $ 37,662 $ 20,250 $ 17,190 $ 14,130 $ 23,521 $ 23,814 $ 23,866 s 18,546Unrestricted 106,533 109,486 111,220 104,728 153,976 175,316 176,786 152,321 165,767 187,347

Total business-type activities net position $ 157,522 $ 158,053 $ 149,102 $ 124,978 $ 171,166 $ 189,446 s 200,307 $ 176,135 $ 189,655 $ 205,895

en District-wide:-..jNet investment in capital assets $ 10,466,603 $ 11,569,840 $ 11,968,353 $ 10,494,986 $ 10,556,703 $ 10,635,238 s 10,801,733 $ 10,587,578 $ 11,073,773 $ 11.620.778Restricted:

Capital projects 306,125 53,264 59,162 33,439 135,890 150,809 45.790 45,790 145,790 145,905Debt service 10,175 10,175Other purposes 354,759 226,846 176,349 269,632 265,101 625,184 483.461 837,735 626,114 696,463

Unrestricted (1,043,300) (1,350,192) (1,410,473) (1,301,511) (1,374,638) (1,395,374) (1,161,281) (1,122,538) (1,228,491) (1,124.890)Total costrict net position $ 10,106,187 $ 10,489,756 $10,803,566 $ 9,508,721 $ 9,583,056 s 10,015,857 $ 10,169,703 s 10,348,565 $ 10,617,186 $ 11,336,256

Audubon School DistrictChanges in Net Position, Last Ten Fiscal Years(accrual basis of accounting)

J-2

Alldllbon School District J-2Changes in Net Position, Last Ten Fiscal Years(accrual basis of accounting)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014Business-type activities:

Charges for services:Food service 314,721 319,316 341,344 340,858 339,234 313,605 274,866 241,804 245,537 246,017CommunitY educa~on 78,930 91,410 87,525 93,644 91,663 90,990 85,087 83,655 105,679 108,971After school program 91,141 87,3n 87,430 92,698 113,360 103,078 118,793 101,830 106,566 105,481

Capital grants and contributions 5,360Operating grants and contribu~ons n,898 79,351 76,767 96,412 110,552 118,415 117,742 145,719 _ 162,846 173,809

Total business type acwities program revenues 562,690 5n,454 593,066 623,612 654,809 626,088 596,488 573,008 625,990 634,278Total district program revenues $ 12,751,741 $ 6,562,246 $ 7,016,600 $ 7,363,686 $ 6,506,993 $ 5,348,743 $ 5,462,149 $ 5,797,631 $ 6,295,518 $ 5,975,347

Net (Expense)lRevenue:Governmental ac~vities $ (7,579,292) $ (14,372,429) $ (15,156,756) $ (15,945,9n) $ (16,018,151) $ (17,547,970) $ (17,561,397) $ (18,451,754) $ (18,407,994) $ (19,208,858)BuSiness-type activities !32,256) !37,197) !17,704) !27,809) 14,504 !5,373) !23,651) !36,377} !16,923) !21,852)Total district-wide net expense s F,611 ,548) $ !14,409,626l $ !15,174,460l $ !15,973,786) $ !16,003,64:!2 $!17,553,343) $ ~17,585,048) $ !18,488,131~ $ II8,424,917) $ !19,23O,710)

General Revenues and Other Changes in Net Position:Governmental acWities:

Property taxes levied for general purposes, net $ 7,421,011 $ 7,827,851 $ 8,500,527 $ 8,936,698 $ 9,219,733 s 9,328,923 $ 9,813,891 $ 10,010,169 $ 10,110,372 $ 10,312,579Taxes levied for debt service 676,193 916,482 969,406 980,895 868,522 921,729 960,700 1,043,016 938,312 1,163,570Unrestricted grants and contributions 5,850,612 5,840,251 5,812,509 5,961,n5 5,n4,93O 7,516,359 6,763,062 7,290,221 7,455,220 8,196,226

00 Investment earnings 139,860 8,534 11,302 8,387 2,797 14,919 194<0 Miscellaneous income 66,459 192,351 180,nl 208,907 237,469 202,561 199,633 322,736 263,243 279,313

Prior year payables cancelled 429,364Prior year receivables cancelled (45,153)Loss on disposal of assetsTransfers !2O,000) !5,000) !IS,OOO) !10,000) !22,000) !33,098) !11,354) !3O,000) !38,000)

TotaJ governmental activities 14,563,499 14,765,469 15,469,515 16,081,662 16,048,298 17,962,491 17,704,382 18,654,788 18,737,147 19,913,688

Business-type acwities:Investment earnings 1,246 2,596 3,753 2,780 1,666 1,653 1,414 851 443 92Prior year payables cancelled 20,018Transfers 20,000 5,000 15,000 10,000 22,000 33,098 11,354 30,000 38,000

Total business-type acwities 1,246 22,596 8,753 17,780 31,684~ 23,653 34,512 12,205 30,443 38,092Total district-wide $ 14,584,745 $ 14,788,065 $ 15,478,268 $ 16,099,422 $ 16,079,982 $ 17,986,144 $ 17,738,894 $ 18,868,993 $ 18,767,590 $ 19,951,780

Change in Net Position:Governmental acWities $ 7,004,207 $ 393,040 s 312,759 $ 135,685 $ 30,147 $ 414,521 $ 142,985 $ 203,034 $ 329,153 $ 704,830Business-type acwities !31,010) !14,801) !8,951) !10,049) 46,188 18,280 10,861 !24,172) 13,520 16,240

Total district-wide s 6,973,197 $ 378,439 $ 303,809 $ 125,636 $ 76,335 $ 432,801 s 153,846 $ 178,862 $ 342,673 $ 721,070

Audubon School DistrictFund Balances, Governmental Funds,Last Ten Fiscal Years(moatfJed accrual basis of accounting)

J-3

Audubon School District J-4Changes in Fund Balances, Governmental Funds,Last Ten Fiscal yeats·(modified accrual basis of accounting)

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

RevenuesTax levy $ 8,097,204 $ 8,744,333 $ 9,469,933 $ 9,917,593 $ 10,088,255 $ 10,250,652 $ 10,774,591 $ 11,053,185 $ 11,048,684 $ 11,476,149Tuition charges 3,198,316 3,419,279 3,519,748 3,802,681 3,887,698 2,486,013 2,702,485 2,861,756 2,749,838 2,679,181Interest eamings 101,305 8,534 11,302 8,387 2,797 14,919 194Miscellaneous 105,014 192,351 163,499 . 208,907 237,469 202,561 199,633 322,736 263,243 279,313State sources 14,011,349 7,669,760 8,196,536 8,371,772 7,333,170 7,994,764 8,352,205 8,897,683 9,811,571 10,206,082Federal sources 829,998 736,004 519,759 527,396 406,246 1,767,086 574,033 755,405 563,339 652,032

Total revenue 26,343,186 20,770,261 21,880,777 22,836,736 21,955,635 22,715,995 22,603,141 23,890,765 24,436,675 25,292,757

ExpendituresInstruction

Regular Instruction 6,809,468 6,734,572 6,810,322 7,201,898 6,803,687 7,324,777 6,982,983 6,629,431 6,732,283 7,279,627Special education instruction 1,424,419 1,553,419 1,568,855 1,674,081 1,487,508 1,583,603 1,638,030 2,103,198 2,135,574 2,140,613Other instruction 902,347 899,973 917,561 866,228 977,813 978,966 1,061,682 1,124,921 1,104,222 1,120,653

Support Services:Tuition 487,480 547,097 611,728 476,745 610,272 590,942 789,288 981,328 913,270 918,019Student & instruction related services 1,676,366 1,775,462 1,734,057 1,740,180 2,036,527 2,149,810 2,208,581 2,194,156 2,270,838 2,404,025General administration 363,918 344,428 342,117 369,438 364,370 370,483 404,132 467,745 400,261 345,800

<0School administrative services 723,203 768,553 807,240 856,471 897,418 932,150 935,505 982,722 1,015,206 1,000,431

..... Central services 393,923 416,611 483,774 467,469 427,657 428,175 431,545 492,729 525,491 541,492Plant operations and maintenance 1,331,621 1,479,412 1,592,091 1,706,215 1,785,104 1,751,800 1,793,283 1,706,521 1,665,454 1,746,430Pupil transportation 285,455 263,856 270,329 359,806 316,517 346,644 325,132 332,230 340,979 350,902Other support servicesEmployee benefits 4,187,001 4,678,898 5,396,365 5,667,577 5,090,561 4,745,626 4,794,167 5,234,737 5,909,433 5,697,808

Transfer of funds to charter school 22,128Capital outlay 16,796,019 721,799 235,781 220,764 289,816 152,198 250,691 453,291 456,426 418,608Debt service:

Principal 400,000 500,000 465,000 495,000 505,000 565,000 800,000 705,000 770,000 970,000Interest and other charges 485,377 575,660 732,050 650,754 523,098 501,135 475,379 450,291 257,179 289,080

Tolal expenditures 36,266,597 21,259,740 21,947,270 22,752,626 22,115,348 22,421,329 22,690,398 23,858,300 24,518,744 25,223,488 .Excess (Deficiency) of revenues

over (under) expendttures (9,923,411 ) (489,479) (66,493) 84,110 (159,713) 294,666 (87,257) 32,465 (82,069) 69,269

Other Financing sources (uses)Prior year accounts payable canceled 429,364 17,272 (45,153)Capital lease (nonbudgeted) 253,048 140,000 55,000 295,177Transfers in 100,355 10,175 8,375Transfers out (100,355) (20,000) (15,175) (23,375) (10,000) (22,000) (33,098) (11,354) (3D,OOO) (38,OOO)

Total other financing sources (uses) 682,412 120,000 67,272 (15,000) (55,153) (22,000) (33,098) 283,823 (30,000) (38,000)

Net change in fund balances $ (9,240,999) $ (369,479) $ 779 $ 69,110 $ (214,866) $ 272,666 $ (120,355) $ 316,288 $ (112,069) $ 31,269

Debt service as a percentage ofnoncapital expenditures 4.55% 5.24% 5.51% 5.09% 4.71% 4.79% 4.79% 4.94% 4.27% 5.08%

Source: District records

Note: Noncapital expenditures are total expenditures less capital outlay.

Audubon School DistrictGeneral Fund - Other Local Revenue by SourceLast Ten Fiscal Years(modified accrual basis of accounting)

J-5

TransferFiscal Year Interest on Prior Year From Pay to

Ending June 30, Investments Tuition Refunds Rentals Unempl0l!!!ent E-rate Pla~ Miscellaneous Total

2005 $ 58,650 $ 3,198,316 $ 30,447 $ 9,633 $ 7,234 $ 3,304,2802006 135,463 3,419,279 30,138 30,090 5,194 3,620,1642007 73,206 3,519,748 35,132 65,700 763 3,694,5492008 57,021 3,802,681 66,647 67,915 25,711 4,019,9752009 16,396 3,887,698 10,807 92,338 $ 101,753 18,972 4,127,9642010 24,619 2,486,013 80,563 89,924 22,374 2,703,4932011 10,284 2,702,485 43,563 95,063 $ 37,175 13,742 2,902,3122012 8,427 2,861,756 95,257 161,811 $ 17,400 30,412 9,429 3,184,492

<0 2013 2,904 2,749,838 37,987 162,419 14,728 45,205 3,013,081I\) 2014 958 2,679,181 22,754 171,572 43,485 40,429 2,958,379

$ 387,928 $ 31_,306,995 $ 453,295 $ 946,465 $ 101,753 $ 17,400 $ 125.800 $ 189,053 $ 33,528,689


Audubon School DisbictAssessed Value and Actual Value of Taxable Property,Last Ten Fiscal Years

J~

Fiscal Total DirectYear Public Tax- School Tax Estimated Actual

Ended Total Assessed Utilities Net Valuation Exempt Rate (County Equalized)June 30, Vacant Land Residential Commercial Industrial Al!arbnent Value a Taxable Prol!erty b Value

2005 $ 1,167,700 $ 293,193,950 $ 41,527,600 $ 140,000 $ 8,985,300 $ 345,014,550 $ 509,015 $ 345,523,565 $ 26,954,000 2.531 $ 496,786,7342006 1,213,900 293,451,850 41,586,600 140,000 8,985,500 345,377,850 409,503 345,787,353 27,186,800 2.738 570,591,1372007 1,136,700 293,651,150 49,638,300 140,000 8,114,600 352,680,750 369,893 353,050,643 27,084,400 2.810 694,607,0332008 1,088,400 294,275,350 50,105,100 140,000 7,909,900 353,518,750 1,510,509 355,029,259 27,220,000 2.857 745,875,4632009 R 3,140,550 627,251 ,600 100,783,204 750,900 17,213,600 749,139,854 1,660,744 750,800,598 54,500,900 1.362 773,143,7062010 2,953,500 625,218,800 99,007,104 590,000 16,028,100 743,797,504 2,093,216 745,890,720 56,378,200 1.412 762,460,046

co 2011 2,378,000 623,609,000 96,257,804 590,000 14,307,500 737,142,304 1,639,236 738,781,540 56,764,700 1.457 749,039,997to) 2012 2,028,300 621,741,700 95,548,404 590,000 14,307,500 734,215,904 1,555,827 735,771,731 56,764,700 1.459 753,330,922

2013 1,897,000 621,118,700 94,902,804 590,000 14,307,500 732,816,004 1,520,417 734,336,421 56,945,600 1.515 750,311,8562014 1,532,100 619,210,500 94,165,104 350,000 14,401,400 729,659,104 1,361,953 731,021,057 57,043,900 1.569 712,557,462

Source:Municipal Tax Assessor

Note:Real property is required to be assessed at some percentage of true value (fair or market value) established by each county board of taxation.Reassessment occurs when ordered by the County Board of Taxation

a Taxable Value of Machinery, Improvements and Equipment of Telephone, Telegraph and Messenger System Companies

b Tax rates are per $100 of assessed valuation.

R Reassessment

Audubon School DistrictDirect and Overlapping Property Tax RatesLast Ten Fiscal Years(rate per $100 of assessed value)

J-7

Fiscal Audubon School District Direct Rate Overlap(!ing Rates TotalYear General Direct and

Ended Obligation Borough of Camden Overlapping TaxJune 30, Basic Rate Debt Service Total Direct Audubon Library County Rate

2005 $ 2.341 $ 0.190 $ 2.531 $ 0.952 $ 1.113 $ 4.5962006 2.478 0.260 2.738 1.042 1.249 5.029

co 2007 2.540 0.270 2.810 1.102 1.296 5.208.j>.

2008 2.611 0.246 2.857 1.212 1.211 5.2802009 R 1.239 0.123 1.362 0.651 0.597 2.6102010 1.289 0.123 1.412 0.721 0.625 2.7582011 1.337 0.120 1.457 0.734 $ 0.033 0.680 2.9042012 1.339 0.120 1.459 0.775 0.034 0.742 3.0102013 1.362 1.362 0.807 0.034 0.802 3.0052014 1.396 0.173 1.569 0.825 0.032 0.785 3.211

Source: Municipal Tax Collector

R Reassessment

Audubon School DistrictPrincipal Property Tax Payers,Current Year and Nine Years Ago

J-B

2014 2005Taxable % of Total Taxable %ofTotal

Assessed District Net Assessed District NetTax~I!r Value Assessed Value Tax~aI!r Value Assessed Value

Wolfson Group, LLC $ 17,810,500 2.44% Audubon Ventures $ 13,002,100 3.76%Wolfson Group, LLC 14,310,600 1.96% Public Service Electric & Gas 3,601,900 1.04%Supervalu 9,000,000 1.23% Imperial Reality Association 1,560,000 0.45%PSE&G 3,500,000 0.48% Oak Terrace Apartments, LLC 1,310,700 0.38%Audubon Equities, LLC 1,750,000 0.24% Audubon Equities, LLC 1,006,100 0.29%Oak Terrace Apartments, LLC 1,700,000 0.23% Benjamin Company 825,000 0.24%Lee Associates 1,378,200 0.19% Audubon Pharmacy Co. 753,100 0.22%

CD Bell Atlantic 1,361,953 0.19% WANN, LLC 710,000 0.21%(11

Audubon Savings Bank 1,264,100 0.17% 622 Castle Arms, LLC 700,000 0.20%Castle Arms 1,200,000 0.16% Guy E. Elzy, Jr. 625,000 0.18%

Total $ 53.275.353 7.29% $ 24 ..093,900 6.97%

Source: Municipal Tax Assessor

Audubon School DistrictProperty Tax Levies and Collections,Last Ten Fiscal Years

J-9

Collected within the Fiscal Year CollectionsTaxes Levied otthe Lell~· in

Fiscal Year Ended for the Percentage of SubsequentJune 30, Calendar Year Amount Lev~ Years

2005 $ 8,097,204 $ 8,097,204 100.00%2006 8,744,333 8,744,333 100.00%2007 9,469,933 9,469,933 100.00%2008 9,917,593 9,917,593 100.00%2009 10,088,255 10,088,255 100.00%2010 10,235,157 10,235,157 100.00%2011 10,774,591 10,774,591 100.00%2012 11,053,185 11,053,185 100.00%2013 11,048,684 11,048,684 100.00%2014 11,167,530 10,003,960 89.58% $ 1,163,570

Source: District records including the Certificate and Report of School Taxes (A4F form)

a School taxes are collected by the Municipal Tax Collector. Under New Jersey State Statutes,a municipality is required to remit to the school district the entire property tax balance, in theamount voted upon or certified prior to the end of the school year.

96

Audubon School DistrictRatios of Outstanding Debt by TypeLast Ten Fiscal Years(dol/ars in thousands, except per capita)

J-10

Business-TypeGovernmental Activities Activities

FiscalYear General Unfunded Percentage of

Ended Obligation Pension Capital PersonalJune30z Bonds 8 Llablllt~ Leases Ca(!ital Leases Total District Income b Per Ca~lta c

2005 $ 13,835,000 $ $ 162,338 ~ $13,997,338 4.17% $ 1,5542006 13,335,000 66,696 13,401,696 3.77% 1,4932007 12,870,000 253,048 13,123,048 3.58% 1,4682008 12,375,000 349,837 12,724,837 3.39% 1,4312009 11,870,000 331,723 12,201,723 3.25% 1,3742010 11,305,000 211,049 11,516,049 3.08% 1,3062011 10,705,000 10,705,000 2.74% 1,2152012 10,410,000 295,177 10,705,177 2.68% 1,2192013 9,640,000 242,869 9,882,869 d 1,1272014 8,670,000 8,670,000 d d

Sources:a District Records.b Personal Income has been estimated based upon the municipal population and per capita

personal income.c Per Capita Personallnome Data provided by the NJ Dept. of Labor and Workforce.d Not available.

97

Audubon School DistrictRatios of Net General Bonded Debt OutstandingLast Ten Fiscal Years(doffars in thousands, except per capita)

FiscalYear

EndedJune 30,

2005200620072008200920102011201220132014

General Bonded Debt OutstandingPercentage of

General Net General Net AssessedObligation Bonded Debt Valuation

Bonds Deductions Outstanding: a Taxable b Per Cae ita C

$ 13,835,000 $ $ 13,835,000 4.00% $ 1,53613,335,000 13,335,000 3.86% 1,48612,870,000 12,870,000 3.65% 1,43912,375,000 12,375,000 3.49% 1,39111,870,000 11,870,000 1.58% 1,33611,305,000 11,305,000 1.52% 1,28210,705,000 10,705,000 1.45% 1,21510,410,000 10,410,000 1.41% 1,1859,640,000 9,640,000 1.31% 1,0998,670,000 8,670,000 1.19% d

Sources:a District Recordsb Net Assessed Valuation provided by Abstract of Ratables, County Board of Taxationc Per Capita Personal Income Data provided by the NJ Dept. of Labor and Workforce.d Not available.

98

J-11

Audubon School DistrictRatios of Overlapping Governmental Activities DebtAs of December 31, 2013

J-12

Borough of AudubonCamden County General Obligation Debt

EstimatedEstimated Share of

Debt Percentage OverlappingOutstanding Applicable a Debt

$ 1,512,250 (1) 100.000% $ 1,512,250192,822,564 (1) 1.999% (2) 3,854,523

5,366,773

8,910,000

$ 14,276,773

Governmental Unit

Debt repaid with property taxes:

Subtotal, overlapping debt

Audubon School District Direct Debt

Total direct and overlapping debt

Sources:(1) Entity's Audit Report(2) The County percentage is based upon a calculation reflecting the Borough's share of the 2013 Equalized Valuation.

The source for this computation was the 2013 County Abstract of Ratables, provided by the County Board ofTaxation.

99

Audubon School DistrictLegal Debt Margin Infonnation,Last Ten Fiscal Years(dollars in thousands)

J-13

Legal Debt Margin Calculation for Fiscal Year 2014

Equalized valuation basis (1)2013 $ 709,149,3312012 746,677,2272011 749,430,431

$2,205,256,989

Average equalized valuation of taxable property $ 735,085,663

Debt limit (4% of average equalized valuation) (2) 29,403,427Net bonded school debt (3) 8,670,000

Legal debt margin $ 20,733,427

~0 Fiscal Year0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Debt limit $ 17,800,759 $ 19,898,338 $ 23,087,507 $ 26,373,636 $ 29,029,857 $ 30,161 ,027 $ 30,285,422 $ 30,088,948 $ 29,912,234 $ 29,403,427

Total net debt applicable to limit (3) 13,835,000 13,335,000 12,870,000 12,375,000 11,870,000 11,305,000 10,705,000 10.410.000 9.640.000 8,670,000

Legal debt margin $ 3,965,759 $ 6,563,338 $ 10,217,507 $ 13,998,636 $ 17,159,857 $ 18,856,027 $ 19,580,422 $ 19,678,948 $ 20,272,234 $ 20,733,427

Total net debt applicable to the limitas a percentage of debt limit 77.72% 67.02% 55.74% 46.92% 40.89% 37.48% 35.35% 34.60% 32.23% 29.49%

Sources:(1) Equalized valuation bases were obtained from the Annual Report of the State of New Jersey, Department of Treasury, Division of Taxation.(2) Limit set by NJSA 18A:24-19 for a K through 12 district.(3) District Records

Audubon School DistrictDemographic and Economic StatisticsLast Ten Fiscal Years

Year

2005200620072008200920102011201220132014

Source:

Per CapitaPersonal Personal Unemployment

PQPulation a Income b tncoms " Rated

9,006 $ 336,049,884 $ 37,314 1.7%8,974 355,020,414 39,561 1.8%8,941 366,545,236 40,996 1.6%8,894 375,860,440 42,260 2.2%8,883 375,235,686 42,242 3.5%8,818 374,385,826 42,457 3.7%8,813 390,935,867 44,359 3.7%8,784 400,023,360 45,540 3.7%8,771 e e 7.8%

e e e e

a Population information provided by the NJ Dept of Labor and Workforce DevelopmentPersonal income has been established based upon the municipal population and per

capita personal income presented.Per Capita personal income provided by the NJ Dept. of Labor and Workforce Development.Unemployment data provided by the NJ Dept of Labor and Workforce DevelopmentInformation not available

b

c

d

e

101

J-14

Audubon School District J-16Full-time Equivalent District Employees by FunctionlProgram,Last Ten Fiscal Years

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014FunctionIProqram

InstructionRegular 124 124 124 124 118 118 118 118 124 124Special education 17 17 17 17 17 17 17 18 19 19Other special education 1 1 1 1 1 1 1 1 1 1Other instruction 13 13 13 13 13 13 13 13 15 15

Support Services:Student & instruction related services 16 16 16 16 16 16 16 16 16 16School administrative services 10 10 10 10 10 10 10 10 10 10..... General and business administrative services 9 9 9 9 9 9 9 9 9 90

I') Plant operations and maintenance 25 25 25 25 25 25 25 25 25 25Pupil transportation 3 3 3 3 3 3 3 3 3 3Business and other support services 5 5 5 5 5 5 5 5 5 5

Total 223 223 223 223 217 217 217 218 227 227

Source:District Personnel Records

Audubon School DistrictOperating Statistics,Last Ten Fiscal Years

J-17

PUE!ivreacher. RatioAverage

Masion Havllnd Daily Average Daily % Change in StudentFiscal Resident Operating Cost Per Percentage Teaching Avenue Avenue Senior High Enrollment Attendance Average Daily AttendanceYear Enrollment Expenditures • Pupil Change Staff" School School School (ADE) C (ADA)c Enrollment Percentage

2005 1,671 $ 18,585,199 $ 11,122 8.72% 154 1:23 1:20 1:21 1,671.0 1,636.8 -4.4~% 97.95%2006 1,629 19,462,281 11,947 7.42% 154 1:23 1:20 1:21 1,629.0 1,586.0 -2.51% 97.36%2007 1,567 20,514,439 13,092 9.58% 155 1:22 1:20 1:20 1,567.0 1,487.0 -3.81% 94.89%2008 1,524 21,386,108 14,033 7.19% 155 1:22 1:20 1:20 1,524.0 1,475.0 -2.74% 96.78%2009 1,522 20,797,434 13,665 -2.62% 149 1:22 1:20 1:20 1,498.0 1,429.0 -1.71% 95.39%2010 1,521 21,202,996 13,940 2.02% 149 1:22 1:20 1:20 1,482.0 1,429.0 -1.07% 96.42%2011 1,480 21,364,326 14,435 3.55% 149 1:22 1:20 1:20 1,440.0 1,366.0 -2.83% 95.00c1o2012 1,439 22,249,716 15,462 7.11% 149 1:22 1:20 1:20 1,402.0 1,337.0 -2.64% 95.36%2013 1,485 23,035,139 15,512 0.32% 159 1:22 1:20 1:20 1,410.0 1,334.0 0.57% 94.61%.... 2014 1,476 23,545,800 15,952 2.64% 159 1:22 1:20 1:20 1,410.0 1,337.9 0.00% 94.89%

0(0)

Sources: District records

Note: Enrollment based on annual October district count

a Operating expenditures equal total expenditures less debt service and capital ouUay.b Teaching staff includes only full-time equivalents of certificated staff.c Average daily enrollment and average daily attendance are obtained from It1e School Register Summary (SRS).

Audubon School District J-18School Building InformationLast Ten Fiscal Years

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014District BuildingElementaryHaviland Avenue School

Square Feet 41,330 41,702 41,702 41,702 41,702 41,702 41,702 41,702 41,702 41,702Capacity (students) 400 400 400 400 400 400 400 400 400 400Enrollment 281 266 262 217 259 259 259 276 255 249

Mansion Avenue SchoolSquare Feet 47,001 48,439 48,439 48,439 48,439 48,439 48,439 48,439 48,439 48,439Capacity (students) 575 575 575 575 575 575 575 575 575 575Enrollment 393 404 401 390 392 392 392 369 323 292

..... Audubon JrlSr High School0 Square Feet 165,000 187,024 187,024 187,024 187,024 187,024 187,024 187,024 187,024 187,024.". Capacity (students) 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100 1,100

Enrollment 956 911 904 917 820 820 820 781 832 869

Number of Schools at June 30,2014Elementary 2JrlSr High School 1

Source: District Facilities Office

Audubon School DistrictSchedule of Required MaintenanceLast Ten Fiscal Years

UNDISTRIBUTED EXPENDITURES - REQUIREDMAINTENANCE FOR SCHOOL FACILIllES

1HlOO-261-xxx

2005 2006• School Facilities

High School $ 155,798 $ 162,431Haviland School 48,527 43,146Mansion School 51,081 48,222

To1al School Facilities $ 255,406 $ 253,798

_..oC1I

• School facilities as defined under EFCFA.(N.J.A.C. 6A:26-1.2 and N.JAC. 6A:26A-1.3)


2007

$ 155,068 $39,42444,442

$ 238,934 $

2008 2009 2010

148,264 $ 166,540 $ 172,85838,040 43,557 43,21442,853 46,118 45,834

229,157 $ 256,215 $ 261,906

2011 2012 2013

$ 177,941 $ 184,140 $ 203,42247,045 48,912 43,26851,750 54,668 50,276

$ 276,736 $ 287,720 $ 296,966

2014

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Total

46,656

$ 189,110 $ 1,715,57240,307 435,440

481,900

$ 276,073 $ 2,632,911

Audubon School DistrictInsurance ScheduleJune 30, 2014

Commercial Package Policy d)Building and Contents (All Locations)

Limits of liability per occurrenceGeneral liabilityGeneral and Auto liabilityComprehensive crime coverage

Employee DishonestyForgery or Alteration

Boiler and machineryExcess LiabilityProfessional Liability

Workers Compensation (2)Bodily Injury by AccidentBodily Injury by Disease

Volunteer Accident Insurance - AIG Insurance

Surety Bonds - Selective Insurance Company:TreasurerBoard Secretary

(1) School Alliance Insurance Fund(2) NJ School Board Association(3) AIG Insurance Company(4) Selective Insurance Company


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Coverage Deductible

$ 250,000,000 $ 1,0005,000,0005,000,000 1,000

500,000 1,00050,000 1,000

100,000,0005,000,000 1,0005,000,000 5,000

StatutoryStatutory

500,000

250,00075,000

Single Audit Section

K-2


651 Route 73 North, Suite 402Marlton, New Jersey 08053(856) 983-2244Fax (856) 983-6674E-Mail: Iscpas@)concentric.net

-Member of-American Institnte ofCPAsNew Jersey Society of CPAs

REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM ANDREPORT ON INTERNAL CONTROL OVER COMPLIANCE

AS REQUIRED BY OMB CIRCULAR A-133AND STATE OF NEW JERSEY OMB CIRCULAR 04-04




Report on Compliance for Each Major Federal and State Program

I have audited Audubon School District (School District), in the County of Camden, State of New Jersey's compliance withthe types of compliance requirements described in the OMB Circular A-133 Compliance Supplement, and the New JerseyState Aid/Grant Compliance Supplement that could have a direct and material effect on each of the School District's majorfederal and state programs for the fiscal year ended June 30, 2014. The School District's major federal and stateprograms are identified in the Summary of Auditor's Results section of the accompanying Schedule of Findings andQuestioned Costs.

Management's Responsibility

Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable toits federal and state programs.

Auditor's Responsibility

My responsibility is to express an opinion on compliance for each of the School District's major federal and state programsbased on my audit of the types of compliance requirements referred to above. I conducted my audit of compliance inaccordance with auditing standards generally accepted in the United States of America; the standards applicable tofinancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; auditrequirements as prescribed by the Office of School Finance, Department of Education, State of New Jersey, and OMBCircular A-133, Audits of States, Local Governments, and Non-Profit Organizations and State of New Jersey OMB'sCircular 04-04, Single Audit Policy for Recipients of Federal Grants, State Grants and State Aid. Those standards, OMBCircular A-133 and State of New Jersey OMB's Circular 04-04 require that I plan and perform the audit to obtainreasonable assurance about whether noncompliance with the types of compliance requirements referred to above thatcould have a direct and material effect on a major federal and state program occurred. An audit includes examining, on atest basis, evidence about the School District's compliance with those requirements and performing such other proceduresas I considered necessary in the circumstances.

I believe that my audit provides a reasonable basis for my opinion on compliance for each major federal and stateprogram. However, my audit does not provide a legal determination of the School District's compliance.

Opinion on Each Major Federal and State Program

In my opinion, the Audubon School District, in the County of Camden, State of New Jersey complied, in all materialrespects, with the types of compliance requirements referred to above that could have a direct and material effect on eachof its major federal and state programs for the fiscal year ended June 30, 2014.

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Other Matters

The results of my auditing procedures disclosed instances of noncompliance, which are required to be reported underState of New Jersey OMS's Circular 04-04 and which is described in the accompanying Schedule of Findings andQuestioned Costs and Auditor's Management Report on Administrative Findings - Financial, Compliance and Performanceas findings number 2014-1 and 2014-2. My opinion on the major state and federal programs is not modified with respect tothis matter.

The School District's response to the findings identified in my audit is described in the accompanying Schedule of Findingsand Questioned Costs. The School District's response was not subjected to the auditing procedures applied in the audit ofcompliance and, accordingly, I express no opinion on the response.

Report on Internal Control Over Compliance

Management of the Audubon School District is responsible for establishing and maintaining effective internal control overcompliance with the types of compliance requirements referred to above. In planning and performing my audit ofcompliance, I considered the School District's internal control over compliance with the types of requirements that couldhave a direct and material effect on each major federal and state program to determine the auditing procedures that areappropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal and stateprograms and to test and report on internal control over compliance in accordance with OMS Circular A-133 and State ofNew Jersey OMS's Circular 04-04, but not for the purpose of expressing an opinion on the effectiveness of internal controlover compliance. Accordingly, I do not express an opinion on the effectiveness of the Audubon's School District's internalcontrol over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does notallow management or employees, in the normal course of performing their assigned functions, to prevent, or detect andcorrect, noncompliance with a type of compliance requirement of a federal or state program on a timely basis. A materialweakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control overcompliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirementof a federal or state program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency ininternal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with atype of compliance requirement of a federal or state program that is less severe than a material weakness in internalcontrol over compliance, yet important enough to merit attention by those charged with governance.

My consideration of internal control over compliance was for the limited purpose described in the first paragraph of thissection and was not designed to identify all deficiencies in internal control over compliance that might be materialweaknesses or significant deficiencies. I did not identify any deficiencies in internal control over compliance that I considerto be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of my testing of internalcontrol over compliance and the results of that testing based on the requirements of OMS Circular A-133 and the NewJersey OMS's Circular 04-04. Accordingly, this report is not suitable for any other purpose.

Report on Schedule of Expenditures of Federal Awards Required by OMB Circular A-133 and Expenditures ofState Financial Assistance Required by New Jersey OMB's Circular 04·04

I have audited the financial statements of the governmental activities, the business-type activities, each major fund, andthe aggregate remaining fund information of the Audubon School District, in the County of Camden, State of New Jerseyas of and for the year ended June 30, 2014, and the related notes to the financial statements, which collectively comprisethe School District's basic financial statements. I have issued my report thereon dated October 24, 2014, which containedan unmodified opinion on those financial statements. My audit was conducted for the purpose of forming an opinion on thefinancial statements as a whole. The accompanying schedule of expenditures of federal and state awards is presented forpurposes of additional analysis as required by OMS Circular A-133 and New Jersey OMS's Circular 04-04 and is not arequired part of the basic financial statements. Such information is the responsibility of management and was derived fromand related directly to the underlying accounting and other records used to prepare the financial statements.

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The information has been subjected to the auditing procedures applied in the audit of the financial statements and certainadditional procedures, including comparing and reconciling such information directly to the underlying accounting and otherrecords used to prepare the financial statements or to the financial statements themselves, and other additionalprocedures in accordance with auditing standards generally accepted in the United States of America. In my opinion, theschedule of expenditure of federal awards and the schedules of expenditures of state financial assistance are fairly statedin all material respects in relation to the basic financial statements as a whole.



(}r plJ-Robert P. InversoCertified Public AccountantPublic School Accountant


110

K-3SCHEDULE A

AUDUBON SCHOOL DISTRICTSchedule of Expenditures of Federal Awards


Federal Program or Grant Balance June 30, 2013 Repayment Balance June 30, 2014Federal Grantor/Pass- Through Grantorl CFDA Grant or State Award Period (Accounts Uneamed Due to Cash Budgetary of Prior Years' (Accounts Unearned Due toPr9_gram Trtle Number Project Number Amount From - To Receivable) Revenue Grantor Adjustmenl Received Ex~nd~ures Balances Receivable) Revenue Grantor

U.S. Department of EducationPassed-Ihrough State Department of Education:

General Fund:Education Jobs Fund 84.410A Nol Available $ 262,351 711111 ·9/30112 $ (653) s 653----

Special Revenue Fund:Tille I:

ARRA 84.369 Not Available 28,927 7/1/09 - 8131/11 (28,927) $ (26,927)Fiscal Year 2014 84.010A NClBOl5014 181,469 7/1/13 - 6130114 147,680 $ (168,271) (20,591)FISCalYear 2013 84.010A NClBOl5013 118,674 9/1/12 - 8131/13 (117,517) 118,674 (1,157)

TlUe III\;Fiscal Year 2014 84.367A NClBOl5014 45,786 711113- 6130114 31,437 (37,119) (5,862)Fiscal Year 2013 84.367A NClBOl5013 56,175 9/1112 - 8/31/13 (52,672) 56,175 (3,503)

I.D.EA Part B - Basic:Fiscal Year 2014 84.027 FTOI5014 362,286 711113 - 6130/14 240,000 (341,321) (101,321)Fiscal Year 2013 84.027 FTOI5013 316,531 911/12 - 8131/13 (110,257) 157,865 (47,628)

I.D.E.A. Part B - Preschool:FIScal Year 2014 84.173 PSOI5014 11,350 711/13 - 6130114 (8,253) (8,253)FIScal Year 2013 84.173 PSOI5013 11,750 9/1/12 - 8/31/13 (10,741) 16,439 (5,696)FIScal Year 2012 84.173 PSOI5012 21,316 911/11 - 8/31/12 (3,879) $ 3,879

Total U.S. Department of Education (323,993) 3,879 786,290 (612,950) (184,774)

U,S, Department of AgriculturePassed-Ihrough State Department of Education:

Enterprise FundFood Distribution Program

FISCal Year 2014 10.550 NlA 24,363 7/1113 - 6130/14 24,363 (24,363)National School Brealdast Program

FIScal Year 2014 10.553 NlA 8,284 7/1113 - 6130114 7,592 (6,284) (692)FIScal Year 2013 10.553 NlA 6,140 711112 - 6130113 ($428) 428

National School Lunch ProgramFIScal Year 2014 10.555 NlA 137,014 711113- 6130/14 129,420 (137,014) (7,584)Fiscal Year 2013 10.555 NlA 134,081 7/1112 - 6130113 (6,422) 6.422

Total U.S. Department of AgriCulture (6,850) 186,245 (169,861) (6,266)

U,S. Department of Health and Human ServicesPassed-through State Department of Human Services:

General Fund:Me<flCaid Assistance Program

Fiscal Year 2014 93.776 NlA 39,082 7/1/13 - 6130114 39,082 (39,082)

39,082 (39,082)

Total Federal Awards $ ~331,4961 $ $ ~ $ 976,270 $ ~621,7131 $ $ ~173,0601 $ $

The accompanying Notes to Schedules of Expenditures of Awards and Financial Assistance are an integral part of this schedule,

K-4SCHEDULE B

AUDUBON SCHOOL DISTRICTSchedule of Expenditures of State Financial Assistance


Program or Grant Balance June 30 2013 Repayment Balance June 30 2014Grant or State' Award Period (Accounts Unearned Due to cash Budgetary of Prior Years' (Accounts Unearned. Due to

State Grantor I Program Title Protect Number Amount From·To Receivable) Revenue Grantor Received. Expenditures Balances Receivable) Revenue Grantor

State Department of EducationGeneral Fund:

Equalization Aid 14-495-034-512~78 $ 5,833,566 7/1/13 - 6/30114 $ 5,289,923 S (5,833,566) (543,643)Equalization Aid 13-495-034-5120-078 5,595,174 7/1/12 - 6/30113 $ (532,694) 532,694Special Education categorical Aid 14-495-034-512~9 698,294 7/1/13 - 6/30/14 633,218 (698,294) (65,076)Special Education categorical Aid 13-495-034-5120-089 678,250 711/12 - 6130113 (64,573) 64,573Security Aid 14-495-034-512~ 129,718 7/1/13 - 6130/14 117,629 (129,718) (12,089)Security Aid 13-495-034-5120-084 116,863 7/1/12 - 6130113 (11,126) 11,126Transportation Aid 14-495-034-5120-014 62,679 7/1/13 - 6130114 56,838 (62,679) (5,841)Transportation Aid 13-495-034-5120-014 62,985 7/1/12 - 6130113 (5,997) 5,997School Choice Aid 14-495-034-5120-068 868,344 711113- 6130/14 787,421 (868,344) (80,923)School Choice Aid 13-495-034-5120-068 417,450 7/1/12 - 6130/13 (39,744) 39,744Adequacy Aid 14-495-034-5120-063 25,300 7/1/13 - 6130114 22,942 (25,300) (2,358)Adjustment Aid 14-495-034-512~5 530,382 7/1/13 - 6130/14 480,955 (530,382) (49,427)Adjustment Aid 13-495-034-512~5 525,615 7/1/12 - 6/30/13 (50,042) 50,042Extraordinary Special Education Cost Aid 14-100-034-5120-473 84,042 7/1/13 - 6/30114 (64,042) (84,042)Extraordinary Special Education Cost Aid 13-100-034-5120-473 72,632 7/1/12 - 6130/13 (72,632) 72,632_. On behalf TPAF Pension Contribution 14-495-034-5095-006 439,508 7/1/13 - 6130/14 439,506 (439,508)

N On behalf TPAF Post Retirement Medical 14-495-034-5095-001 720,628 7/1/13 - 6130/14 720,628 (720,628)Reimbursed TPAF Social Security Ccntr, 14-495-034-5095-002 793,292 7/1/13 - 6130/14 716,137 (793,292) (77,155)Reimbursed TPAF Social Security Contr. 13-495-034-5095-002 762,224 7/1/12 - 6/30113 (76,755) 76755

Total Department of Education (853,563) 10118762 (10165753) (900,554)

New Jersey Schools Construction Corporation:capital Projects Fund:

EDA Educational Facilities Constructionand Financing Act - seeuoo 15:

Renovations to Mansion Ave. Sch601 #O150-05~1000 1,048,600 7/1/03- 6130113 (63,380) (63,380)Renovations to Haviland Ave School #O1~1000 741,610 7/1/03- 6130113 (10) (10)

Total EducationaJ Facilities Construction (63,390) (63,390)

state Department of EducationDebt Service Fund:

Debt Service Aid Type II 14-495-034-512G-017 95,510 7/1/13 - 6130/14 _._--_- 95510 (95510)

State Department of AgricultureNational School lunch Program (State Share)

Fiscal Year 2014 14-100-01 G-335G-023 4,128 7/1/13 - 6/30114 3,676 (4,128) (452)Fiscal Year 2013 13-100-01G-3350-023 4,375 7/1/12 - 6/30113 (144) 144

Total Department of Agriculture (144) 3820 (4128) (452)

Total State Financial Assistance $ 1917,097) $ $ $ 10,218,092 s PO,265,391l $ 1984,396) $

The accompanying Notes to Schedules of Expenditures of Awards and Financial Assistance are an integral part of this schedule,

K-5Audubon School District

Notes to Schedules of Expendituresof Federal Awards and State Financial Assistance


I. GENERAL

The accompanying schedules of expenditures of federal awards and state financial assistance include federal and stateaward activity of the Board of Education, Audubon School District. The Board of Education is defined in Note 1 to theBoard's basic financial statements. All federal and state awards received directly from federal and state agencies, as well asfederal awards and state financial assistance passed through other government agencies, are included on the schedules ofexpenditures of federal awards and state financial assistance.

2. BASIS OF ACCOUNTING

The accompanying schedules of expenditures of federal awards and state financial assistance are presented on thebudgetary basis of accounting with the exception of programs recorded in the food service fund, which are presented usingthe accrual basis of accounting. These bases of accounting are described in Note 1 to the Board's basic financialstatements. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133,Audits of State, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedulemay differ from amounts presented in, or used in the preparation of, the basic financial statements.

3. RELATIONSHIP TO BASIC FINANCIAL STATEMENTS

The basic financial statements present the general fund and special revenue fund on a GAAP basis. Budgetary comparisonstatements or schedules (RSI) are presented for the general fund and special revenue fund to demonstrate finance-relatedlegal compliance in which certain revenue is permitted by law or grant agreement to be recognized in the audit year,whereas for GAAP reporting, revenue is not recognized until the subsequent year or when the expenditures have beenmade.

The general fund is presented in the accompanying schedules on the modified accrual basis with the exception of therevenue recognition of the last state aid payment in the current budget year, which is mandated pursuant to N.J. S.A.1BA:22-44.2. For GAAP purposes that payment is not recognized until the subsequent budget year due to the state deferraland recording of the last state aid payment in the subsequent year. The special revenue fund is presented in theaccompanying schedules on the grant accounting budgetary basis which recognizes encumbrances as expenditures andalso recognizes the related revenues, whereas the GAAP basis does not. The special revenue fund also recognizes the laststate aid payment in the current budget year, consistent with N.J.S.A. 1BA:22-4.2.

The net adjustment to reconcile from the budgetary basis to the GAAP basis is ($55,181) for the general fund and $-0- forthe special revenue fund. See Exhibit C-3, Notes to Required Supplementary Information for a reconciliation of thebudgetary basis to the modified accrual basis of accounting for the general and special revenue funds. Awards and financialassistance revenues are reported in the Board's basic financial statements on a GAAP basis as follows:

Fund Federal

General $ 39,082Special Revenue 612,950Debt ServiceFood Service 169,681

Total $ 821,713

$

State Total

10,110,572 $ 10,149,654612,950

95,510 95,5104,128 173,809

10,210,210 $ 11,031,923$

4. RELATIONSHIP TO FEDERAL AND STATE FINANCIAL REPORTS

Amounts reported in the accompanying schedules agree with the amounts reported in the related federal and state financialreports.

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Audubon School DistrictNotes to the Schedules of Expenditures

of Federal Awards and State Financial AssistanceFor the Fiscal Year Ended June 30, 2014

(Continued)

S. OTHER

Revenues and expenditures reported under the Food Distribution Program represent current year value received andcurrent year distributions respectively. The amount reported as TPAF Pension Contributions represents the amount paid bythe state on behalf of the District for the year ended June 30, 2014. TPAF Social Security Contributions represents theamount reimbursed by the state for the employer's share of social security contributions for TPAF members for the yearended June 30,2014.

6. MAJOR PROGRAMS

Major programs are identified in the Summary of Auditor's Results section of the Schedule of Findings and QuestionedCosts.

7. ADJUSTMENTS

Amounts reported in the column entitled "Adjustments" represent the following:

Federal

Cancelation ofAccounts Receivable $ 3,879

Total $ 3,879

114

K-6AUDUBON SCHOOL DISTRICT

SCHEDULE OF FINDINGS AND QUESTIONED COSTSFOR THE FISCAL YEAR ENDED JUNE 30, 2014

Section 1--Summary of Auditor's Results

Financial Statement Section

Type of auditor's report issued: Unmodified

Internal control over financial reporting:

Material weaknesses identified? yes x no

Significant deficiencies identified that arenot considered to be a material weakness? yes x none reported

Noncompliance material to general purpose financialstatements noted? yes x no

Federal Awards

Internal Control over major programs:



Type of auditor's report on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reportedin accordance with section .510(a) of Circular A-133? yes x no

Identification of major programs:

CFDA Number(s) Name of Federal Program or Cluster

84.010A Title I

10.555 National School Lunch Program

10.553 School Breakfast Program

Dollar threshold used to distinguish between type A and type B programs: $ 300,000

Auditee qualified as low-risk auditee? x yes no

115

K-6AUDUBON SCHOOL DISTRICT

SCHEDULE OF FINDINGS AND QUESTIONED COSTSFOR THE FISCAL YEAR ENDED JUNE 30, 2014

Section 1--Summary of Auditor's Results (Continued)

State Awards

Dollar threshold used to distinguish between type A and type B programs: $ 307,962

Auditee qualified as low-risk auditee? x yes no

Internal Control over major programs:



Type of auditor's report on compliance for major programs: Unmodified

Any audit findings disclosed that are required to be reportedin accordance with N.J. OMB Circular 04-04? x yes no

Identification of major programs:

State Grant/Project Number(s) Name of State Program

14-495-034-5120-078 Egualization Aid

14-495-034-5120-089 Special Education Categorical Aid

14-495-034-5120-068 School Choice Aid

14-495-034-5120-085 Adjustment Aid

14-495-034-5095-002 TPAF Reimbursed Social Security

14-100-010-3350-023 National School Lunch Program (State Share)

116

K·6

AUDUBON SCHOOL DISTRICTSCHEDULE OF FINDINGS AND QUESTIONED COSTS

FOR THE FISCAL YEAR ENDED JUNE 30, 2014

Section 2 ••Schedule of Financial Statement Findings

This section identifies the significant deficiencies, material weaknesses, and instances of noncompliance related tothe financial statements that are required to be reported in accordance with Government Auditing Standards and withaudit requirements as prescribed by the Office of School Finance, Department of Education, State of New Jersey.

None

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Section 3 .. Schedule of Federal Awards and State Financial AssistanceFindings and Questioned Costs

This section identifies the significant deficiencies, material weaknesses, and instances of noncompliance, includingquestioned costs, related to the audit of major Federal and State programs, as required by OMS Circular A-133 andNew Jersey OMS's Circular 04-04.

FEDERAL AWARDS

No findings and/or questioned costs identified.

STATE AWARDS

Finding #2014·1

Information on the State Program:Equalization Aid; GMIS No. 14-495-034-5120-078

Criteria or specific requirement:N.J.A.C. 6A:23-2.11 (f) requires County Superintendent approval for any line-item transfer from an advertisedappropriation account which is cumulatively more than 10% of that amount.

Condition:The School District transferred from an advertised appropriation account an amount that on a cumulativebasis exceeded 10% of the total amount of that line item in the original budget, without proper departmentapproval.

Questioned Costs:None

Context:The School District transferred from Improvement of Instruction Services, an amount that on a cumulativebasis exceeded 10% of the total amount of that line item in the original budget, without proper departmentapproval.

Effect:Violation of N.J.A.C. 6A:23-2.11 (f).

Cause:Oversight

Recommendation:Executive County Superintendent approval should be requested for any transfer from an advertisedappropriation account which is cumulatively more than 10% of that amount.

View of Responsible Officials and Planned Corrective Action:The responsible officials agree with the finding and will address the matter as part of their corrective action plan.

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Section 3 --Schedule of Federal Awards and State Financial AssistanceFindings and Questioned Costs

(Continued)

STATE AWARDS

Finding #2014-2

Information on the State Program:Equalization Aid; GMIS No. 14-495-034-5120-078

Criteria or specific requirement:The District is required to complete the Application for State School Aid (ASSA) in accordance with the instructionsprovided by the State Department of Education.

Condition:The on roll student count did not agree to supporting documents.

Questioned Costs:None

Context:My test of the ASSA disclosed an overstatement of three students in the on roll count when compared to the District'ssupporting documents.

Effect:The reported differences may have an impact on the District's State Aid allocation.

Cause:Oversight

Recommendation:That careful attention is exercised in preparing the Application for State School Aid.

View of Responsible Officials and Planned Corrective Action:The responsible officials agree with the finding and will address the matter as part of their corrective action plan.

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AUDUBON SCHOOL DISTRICTSUMMARY SCHEDULE OF PRIOR-YEAR AUDIT FINDINGS

AND QUESTIONED COSTS AS PREPARED BY MANAGEMENTFOR THE FISCAL YEAR ENED JUNE 30, 2014

This section identifies the status of prior year findings related to the financial statements and Federal Awards andState Financial Assistance that are required to be reported in accordance with Government Auditing Standards, OMSCircular A-133 and State of New Jersey OMS's Circular 04-04.

FINANCIAL STATEMENT FINDINGS

There were no prior year audit findings.

FEDERAL AWARDS


STATE AWARDS


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